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The Way Government Works!?:

If you're one of those people who think that libertarians are just greedy, cruel-hearted, selfish people who hate the poor, and you just can't fathom how they think, you should read this article from Sunday's Washington Post (hat tip: Barone blog via Instapundit). The article details how the dairy lobby ganged up on an entrepreneur to who undercut their prices, and put him out of business.

When I read an article like this, I think, "yes, that's a typical example of how the government works." It's more or less the lens through which I, and I'm sure most libertarians, view the government; social Democrats of my acquaintance seem to have a generally much more benign perspective on government activity, focusing on the "good" that government does in providing aid to the needy and whatnot. (And, if they focus on a story like the Post story at all, they will see it primarily as about the need for campaign finance reform, not as a story about how laws are made in a democracy.)

My point is not to start a debate over which perspective is closer to the truth, but simply to suggest that whether when one thinks of government one thinks of, say, the government preventing grandma from starving by providing her with Social Security, or of the government forcing poor consumers to pay extra for milk to benefit millionaire farmers is almost certainly a good predictor of where one's political sympathies lie. And it has nothing to do with hating, or loving, the poor.

In my own case, growing up amidst the incredible corruption, legal and illegal, of New York City government and politics [one example: neighborhood teenagers from upper-middle-class families who got $12 an hour City jobs supposedly reserved as "job training" for "underprivileged teenagers in the late 1970s, when the city had just emerged from near bankruptcy, because their parents helped out the local Democratic Party] had a significant impact on my perspective on the proper role of government. Perhaps if I had been raised elsewhere, or if my family had benefited from this corruption, as so many real estate developers, attorneys (by getting assigned to be trustees by courts, etc.), and many others did, my outlook would have developed differently.

Steve:
Well, the fundamental question is whether you believe it's better to try and improve the functioning of government or to simply scrap the whole thing as a lost cause.

Personally, I'm pretty sure that in the absence of government a cabal of dairy producers would have a pretty easy time putting an entrepreneur out of business. At least with government we have the hope of well-enforced antitrust laws, whereas otherwise we just have the law of the jungle.
12.12.2006 7:39pm
Glenn W. Bowen (mail):
the milk industry gets slapped with some regularity for regional price fixing, also.

ya gotta have milk, you're going to have greed.
12.12.2006 7:40pm
billb:
All true enough, except he didn't go out of business, he just has to abide by the government price controls to the tune of $400k a year (a "crippling" sum according to page 5 of the article).
12.12.2006 8:00pm
Mr. T.:
Meh. I think it's pretty well established that government serves both of the roles you describe. The question is, would you rather put up with the corruption as long as grandma gets taken care of, or would you rather let grandma starve as the price we pay to be free from corruption? I know which one I'd choose.
12.12.2006 8:04pm
logicnazi (mail) (www):
The very notion that this is the result of an 'outlook' seems problematic to me. Presumably a rational individual would evaluate every situation according to it's individual characteristics and make a decision accordingly. Yes, having evidence that government involvement often screws things up makes a difference but it doesn't mean that you should always decide against government involvement.

For instance libertarians accept government run the police and the army because they feel these are uniquely suited to the government. What about someone like me who is generally skeptical of government action but believes that just like these two examples there are a whole host of things that are also particularly problematic to do privately, e.g., anything that resembles the tragedy of the commons.

In other words it shouldn't be enough to just be skeptical of government action to make you a libertarian. You need to also have some principle which says that in these whole host of various problems the other solutions aren't even worse.
12.12.2006 8:12pm
Justin (mail):
::nods head in agreement for a while::

poor? wtf? how did that come in? Some people don't like government because they're theoretical liberterian, thus all fiscal liberterians care about the poor just as much as economic liberals. O...kay...
12.12.2006 8:16pm
jo:
government price controls to the tune of $400k a year (a "crippling" sum according to page 5 of the article).


that's $400 k per month
12.12.2006 8:22pm
Glenn W. Bowen (mail):
I've read that price controls create shortages (not scarcities); if so why is there not a milk shortage?
12.12.2006 8:46pm
Mark F. (mail):
I've read that price controls create shortages (not scarcities); if so why is there not a milk shortage? Because the government set a minimum price, not a maximum one.
12.12.2006 8:49pm
Mark F. (mail):
For instance libertarians accept government run the police and the army because they feel these are uniquely suited to the government.

Not this libertarian.
12.12.2006 8:51pm
Bob R (mail):

that's $400 k per month


Well if you believe the estimate on how much the price supports cost consumers (got any grains of salt handy?) we are talking $125 [Austin Powers]million[/Austin Powers] per month. Buys a lot more influence than $400 k.
12.12.2006 8:52pm
Steve:
Not this libertarian.

Iraq must be some kind of libertarian fantasyland. Everyone seems to own a gun, and you have the freedom to choose your own militia for protection!
12.12.2006 9:04pm
Yosef Ibrahimi (mail):
Mr. T wrote
Meh. I think it's pretty well established that government serves both of the roles you describe. The question is, would you rather put up with the corruption as long as grandma gets taken care of, or would you rather let grandma starve as the price we pay to be free from corruption? I know which one I'd choose.


That assumes that just because the government doesn't do something, that private actors will not do it.
12.12.2006 9:12pm
Bottomfish (mail):
If government increases its activities on behalf of the poor, two consequences are seen:

(1) additional opportunities for corruption are created;
(2) people are less inclined to charitable activities of their own, because whatever the problem is, the government is supposed to have a program to deal with it.
12.12.2006 9:18pm
FantasiaWHT:
Bottom, you forgot

(3) the poor are less likely to try to stop being poor because it's easier to be taken care of than to work your butt off to maintain the same quality of life
12.12.2006 9:23pm
billb:
jo: Oops! That's what I meant. It still didn't put him out of business (as best as I can tell).
12.12.2006 9:29pm
magoo (mail):
"Perhaps * * * if my family had benefited from this corruption * * * my outlook would have developed differently."

Why doesn't this surprise me?
12.12.2006 9:35pm
grackel (mail):
I guess one might note the irony of the Professor's point of view, given his position as a government employee. Would it not be in keeping with his philosophy to have held out for a position at a private law school? Don't they teach a better quality of law in private schools? In what way is George Mason not yet another den of iniquity, fraud and corruption? Could it be that at last his family benefits "from this corruption "
12.12.2006 9:40pm
TJIT (mail):
I think a lot of libertarians and fiscal conservatives have been created by first hand experience watching the government in action.

I grew up in a rural area spent years watching government farm programs consistently achieve goals that were the exact opposite of what they were supposed to. The farm programs are a tiny portion of the federal budget. Watching that relatively small amount of money create an absolute social, economic, and environmetal disaster on the ground made me firmly believe three things.

1. Big government is bad government

2. Despite all of the protestations of liberals and progressives big government almost always helps the wealthy and politcally connected (ADM is the poster child for this)

3. Despite all of the protestations of liberals and progressive big government almost always harms the poor and politcally weak (The poster children for this are young people who can't rent ground to get a start in farming because the government programs pay landowners more then the young people can afford to pay to rent and farm the ground)
12.12.2006 9:53pm
NevadaDem (mail):

BillB-

So if it didn't put him out of business, it's okay? Yikes!
12.12.2006 9:53pm
TJIT (mail):
Steve,

You said
Well, the fundamental question is whether you believe it's better to try and improve the functioning of government or to simply scrap the whole thing as a lost cause.
If government is small and limited it is much easier to ensure it actually does a reasonable job
Personally, I'm pretty sure that in the absence of government a cabal of dairy producers would have a pretty easy time putting an entrepreneur out of business. At least with government we have the hope of well-enforced antitrust laws, whereas otherwise we just have the law of the jungle.
This case absolutely proves you wrong. This individual started a business and was competing against other dairy producers with no problem and was doing financially well. The other dairy producers could not drive him out of business so they use the government to do what they couldn't. This happens time after time established businesses use the goverment to squash new, smaller businesses they could not compete against.
At least with government we have the hope of well-enforced antitrust laws, whereas otherwise we just have the law of the jungle.
While you keep hoping the little guy will continue to get squashed by the government enforced law of the jungle.
12.12.2006 10:07pm
Paxti:
What's the name of that law again? The anti-dog-eat-dog law? I'm certain I've seen that somewhere before. . .
12.12.2006 10:29pm
billb:
NevadaDem: For the love of God! No! There was nothing normative in my statement. I was just trying to point out DB's error. Stop reading between the lines.
12.12.2006 10:34pm
CEB:
TJIT,

Exactly. Unfortunately, liberals have defined the debate on this issue (not maliciously or dishonestly, I think). They believe that government spending helps the poor, and a valid conclusion from that premise is that if someone is against government spending, he must therefore be against helping the poor. Fiscal conservatives and libertarians need to do a better job convincing people that government spending does not help the poor--we are too succeptible to the charge that we simply don't think government should help the poor.
12.12.2006 11:07pm
crane (mail):

Personally, I'm pretty sure that in the absence of government a cabal of dairy producers would have a pretty easy time putting an entrepreneur out of business. At least with government we have the hope of well-enforced antitrust laws, whereas otherwise we just have the law of the jungle.

This case absolutely proves you wrong. This individual started a business and was competing against other dairy producers with no problem and was doing financially well. The other dairy producers could not drive him out of business so they use the government to do what they couldn't. This happens time after time established businesses use the goverment to squash new, smaller businesses they could not compete against.


You're missing something - the phrase used was "in the absence of government".

If there were no government at all, there would be nothing to stop a powerful dairy cabal from hiring thugs to beat up their competitor, smash his equipment, and steal his cows.
12.12.2006 11:25pm
American Psikhushka (mail) (www):
Mr. T-

Meh. I think it's pretty well established that government serves both of the roles you describe. The question is, would you rather put up with the corruption as long as grandma gets taken care of, or would you rather let grandma starve as the price we pay to be free from corruption? I know which one I'd choose.

You're assuming that grandma wouldn't be taken care of in a libertarian economy.

Do you think it would be easier for the children and grandchildren to take care of grandma if the overall tax burden was 10-15% rather than 45%+?

Do you think it would have been easier for grandma and grandpa to have saved up enough to more effectively fund their retirement if the overall tax burden was 10-15% rather than 45%+?

Do you think it would be easier for local charities or aid societies to take care of grandma if the overall tax burden was 10-15% rather than 45%+? (i.e. do you think charities would be more generously funded if people had much more disposable income?)
12.12.2006 11:46pm
American Psikhushka (mail) (www):
Steve-

Iraq must be some kind of libertarian fantasyland. Everyone seems to own a gun, and you have the freedom to choose your own militia for protection!

Nice strawman. No, Iraq isn't some libertarian "state of nature". First of all, it's a war zone combining both a sectarian, religious civil war and an occupier vs. insurgent conflict. In addition to that you have the normal crime and civil unrest that desperation, starvation, and lawlessness breeds. Then you have a government that large swaths of the populace doesn't recognize, whether officially or unofficially.

So no, it's not some "libertarian fantasyland".
12.12.2006 11:52pm
American Psikhushka (mail) (www):
Steve-

Personally, I'm pretty sure that in the absence of government a cabal of dairy producers would have a pretty easy time putting an entrepreneur out of business. At least with government we have the hope of well-enforced antitrust laws, whereas otherwise we just have the law of the jungle.

Except for the fact that under a libertarian structure there would still be a legal system where you could sue them for price fixing, etc. And insurance and security services for protecting your property. And government and/or private police agencies to investigate any crimes or torts that are committed against you.
12.12.2006 11:59pm
Steve:
Nice strawman. No, Iraq isn't some libertarian "state of nature".

It wasn't a strawman. It was a joke.
12.13.2006 12:12am
Parvenu:
A.P.:
Except for the fact that under a libertarian structure there would still be a legal system where you could sue them for price fixing

Would you? One only has a cause of action for price fixing because a federal regulatory regime creates that action. Libertarians, presumably friends of deregulation, would likely repeal such a regime.
You're assuming that grandma wouldn't be taken care of in a libertarian economy.

I think it's fair to say that one of the reasons the libertarian Gilded Age economic framework was abandoned was because of the perception that that was indeed happening. Social Security wasn't just a pie-in-the-sky idea; no one just arbitrarily pulls a proposal of that magnitude out of a filing cabinet for kicks. It was a reaction to a perceived need of its time.

I would caution against excessive nostalgia for the "good old days" of laissez-faire economics, which is what I see behind the scenes with much of the libertarian argument here (15% tax burden, etc.). The grass is not always greener on the other side, and the march of history is not always down into the dark ages from some golden past. Even if you could for one theoretical instant dismantle the entirety of the welfare state, it would return very quickly through the democratic process if the fundamental societal values underpinning it were undisturbed. This is not to say that I think Social Security is the best way of ensuring that grandma does not starve, and in fact I've liked many elements of proposals for personal accounts and "universal 401(k)" plans that I've seen. A complete dismemberment of all federal entitlement regimes, however, is unlikely, because the same natural economic forces that led to the safety net's construction the first time around are still out there and would likely do so again.
12.13.2006 12:22am
Kevin Murphy:
The problem with campaign finance reform goes like this:

IF the Federal budget is $2 trillion, and if only 5% of that is available for discretionary distribution, that's still $100 billion. Assume that the Senate and the House split that equally, that's about $100 million for each Congressman to spend.

Given the utility of being friends with that kind of money hose, is there any conceivable restriction on political funds that would remove the obvious temptations?

The Libertarian answer, which is drastically reduce the amount of money the government spends, seems the only workable one. Either that or elect honest people.
12.13.2006 12:42am
Jay Myers:
Parvenu:

You're assuming that grandma wouldn't be taken
care of in a libertarian economy


I think it's fair to say that one of the reasons the libertarian Gilded Age economic framework was abandoned was because of the perception that that was indeed happening.

Perhaps, but perceptions can be manipulated. Especially by con men.

Social Security wasn't just a pie-in-the-sky idea; no one just arbitrarily pulls a proposal of that magnitude out of a filing cabinet for kicks. It was a reaction to a perceived need of its time.

Until very recently, most people over 65 lived with much younger relatives. At the time Soc Sec was enacted the national life expectancy for newborns was 64. The life expectancy for that generation of people who were already 65 had been under 50.* Thus, there weren't very many people old enough to qualify for payouts under the program and it was anticipated that in the future most people would die before becoming old enough to collect. If there was so little benefit to the program, what was the incentive? The highly regressive tax that was a part of the program was paid by all workers began being collected in 1937 even though payouts didn't start until 1942. It was generating huge surpluses that were then immediately spent via other government programs. Today approximately a third of the federal government's revenue comes from those regressive withholding taxes but because people never see that money and are told that it is to support them in retirement, they accept the tax like docile sheep. That sounds like a reason to me.

Come on, if they really wanted to make sure "grandma was taken care of", do you think they would have modeled the program after an illegal ponzi scam? What's next? Using a chain letter?

By the way, the original soc sec act contained a clause that guaranteed a worker or his estate wouldn't get back less than had been paid in taxes. That was removed in 1939. And if you think you have a right to the soc sec payout you "earned" with your taxes, check out Flemming v. Nestor (1960). Good thing we have a government program to count on instead of that unreliable private sector. Social Insecurity is more like it.

*According to the United States Life Tables, 2003 published in National Vital Statistics Reports vol.54 number 14
12.13.2006 5:37am
Smallholder (mail) (www):
The Conspiracy had a thread some time ago about the regulation of raw milk - Some of us commented at the time that the real danger was not a health issue - the danger was to the milk producing monopoly.

Regulations about the construction of pasteurization plants are not designed to allow the market to operate - they are designed to create an unacceptably high fiscal barrier to farmers who want to cut out the middleman and sell direct to the consumer. We looked into bottling milk at our farm and the regulation that most boggled my mind is that the processing building had to have a seperate bathroom for the sole use of a USDA inspector who at most visit a handful of times a year. God forbid he would have to walk a hundred feet to the farmhouse - the farmer must add plumbing and a new septic field.

Creating a sterile processing plant that meets the hygiene standards in Europe and Israel might cost $50,000. Creating a processing plant that complies with Virginia regulations would be a quarter-mill. For a small producer who can't spread that capital expense over a lot of product, this constitutes a sizable barrier to entry.

The Washington Post article illustrates the stranglehold of the milk lobby: A guy finds a way to overcome the barrier to entry, operates a small business that benefits his customers with lower cost milk, employs hundreds of people, and helps a Smithian invisible hand lower milk prices across the board. So the lobby finds friends who will crush the entrepreneur.

For Reid and Goodlatte and the rest who claim that they are helping out the poor dairy farmer, my question is: How are those guv'mint subsidies workin' out?

Dairy farms are going out of business all the time - largely because subsidies that disproportionately help big corporate dairies lead to overproduction (minimum price floor) which then lowers the price floor. Economies of scale mean that the 3,000 cow dairy can eke by when the 50 cow family farm collapses.

If those on the left are still not convinced about the stupidity of the support system, here's an argument that might click with another element of their ideology: The large dairies that arise in a subsidized environment generally also use their clout to thwart regulation of their environmental impact. A 50-cow farmer with 100 acres has a positive environmental impact - the "eflluent" of his animals fuels the grassland eco-system. The manure of 3000 cows on 100 acres quickly overwhelms the ability of the soil bacteria to break down the waste, which then runs off and pollutes our water. Deregulation would make those giant dairies unprofitable and we'd see saner environmental management.
12.13.2006 8:41am
American Psikhushka (mail) (www):
Parvenu-

Would you? One only has a cause of action for price fixing because a federal regulatory regime creates that action. Libertarians, presumably friends of deregulation, would likely repeal such a regime.

Easy - the framework for white collar crimes like price fixing, etc. get turned into a cause of action for private tort claims. The vast majority of libertarians believe in some forum to handle legal disputes, be it government administered courts or privately run arbitration systems. Other regulatory functions like workplace safety and environmental protection could be handled this way as well.

I think it's fair to say that one of the reasons the libertarian Gilded Age economic framework was abandoned was because of the perception that that was indeed happening. Social Security wasn't just a pie-in-the-sky idea; no one just arbitrarily pulls a proposal of that magnitude out of a filing cabinet for kicks. It was a reaction to a perceived need of its time.

I'm not a romanticist for any particular past period in American history, my arguments are based on modern conditions. There may have been a perception that this was needed at the time, but if it is such an essential need why has every era since its establishment regarded it as a slush fund to keep the pork barrel rolling?

A complete dismemberment of all federal entitlement regimes, however, is unlikely, because the same natural economic forces that led to the safety net's construction the first time around are still out there and would likely do so again.

Possibly. On the other hand if a critical mass became educated and motivated enough to dismantle some of these schemes they might be educated and motivated enough to keep them from re-forming.
12.13.2006 9:13am
American Psikhushka (mail) (www):
Smallholder-

Creating a sterile processing plant that meets the hygiene standards in Europe and Israel might cost $50,000. Creating a processing plant that complies with Virginia regulations would be a quarter-mill. For a small producer who can't spread that capital expense over a lot of product, this constitutes a sizable barrier to entry.

Thus began the days of the swashbuckling unpasteurized milk smugglers. You guys should drive souped-up milk trucks like the moonshiners and bootleggers.
12.13.2006 9:21am
J. F. Thomas (mail):
The large dairies that arise in a subsidized environment generally also use their clout to thwart regulation of their environmental impact. A 50-cow farmer with 100 acres has a positive environmental impact - the "eflluent" of his animals fuels the grassland eco-system. The manure of 3000 cows on 100 acres quickly overwhelms the ability of the soil bacteria to break down the waste, which then runs off and pollutes our water. Deregulation would make those giant dairies unprofitable and we'd see saner environmental management.

That's the thing about you libertarians. You claim to be brilliant economists and believe in the free market. Yet to make your case, you expect everyone else (especially us ignnant guvmunt luvin' libluls) to be complete morons and not know the first thing about economics or the environment.

First of all, it doesn't matter if you are a huge mega-dairy or a family farmer an acre of farmland can support X number of cows depending on a number of factors (climate, geography, etc.), so to say a family farmer will pollute less than a corporate farmer is just ridiculous. It all depends on their farming practices, not who is running the farm.

And isn't it the mantra of the libertarian that the free market should prevail without government fetters? Doesn't that mean, that efficient, meaning industrial, large scale production of commodities will almost always prevail, and the family farmer (and their better environmental practices) would quickly become a thing of the past?

In fact without government intervention, what is to prevent the development of regional cartels of milk producers who control all aspects of production and fix prices? Milk would be especially susceptible to such market manipulation since it is highly perishable and once a single well-financed player gets significant control of a market he simply can use predatory pricing (which would be perfectly legal and presumably even ethical in a perfect libertarian society) to drive his competitors out of business and once he does that he can set prices at whatever level he wants as penetrating the market by outsiders will be very difficult.
12.13.2006 9:25am
M.B.:
Similarly to the milk case, in Illinois in the 70s large car dealerships and used car lots got together to pass a law forbidding auto sales on Sunday. The big guys' employees didn't want to work on Sunday and the small dealers were staying open and taking the business, or something like that.
12.13.2006 9:36am
Zubon (www):
J. F. Thomas:
An interesting story, but it sounds almost exactly like the status quo under government regulation. The major difference being that producers breaking the cartel can be fined or arrested.

The point about large fixed costs is that family farms are becoming a thing of the past. This is partly because large-scale production is more efficient, but also because regulation creates large fixed costs that can only be borne with large-scale production. There will always be niches for small, nimble competitors, unless you legally raise the bar so high that they are forbidden from competing.
12.13.2006 10:20am
JohnAnnArbor (www):

Similarly to the milk case, in Illinois in the 70s large car dealerships and used car lots got together to pass a law forbidding auto sales on Sunday. The big guys' employees didn't want to work on Sunday and the small dealers were staying open and taking the business, or something like that.

Detroit-area dealers used to not be open on Saturdays or Sundays. This was enforced through a more direct approach: breaking the plate-glass windows of violators.
12.13.2006 10:25am
J. F. Thomas (mail):
There will always be niches for small, nimble competitors, unless you legally raise the bar so high that they are forbidden from competing.

Not if you believe in a free market in a commodity like milk. A small nimble competitor may be able to enter the market but the dominant player will simply use predatory pricing (undercutting the price of the new competitor by selling his product at a loss) until he drives his smaller, less well financed, competitor out of business. It is how monopolies thrive and survive in an unregulated market. Milk, because it is perishable and cannot be transported long distances, is particularly susceptible to such market manipulation. Monopolies naturally develop in industries that either require massive capital infrastructure or involve products that are somehow difficult to transport or perishable.
12.13.2006 10:42am
Hans Bader (mail):
Most cartels in America, and especially the ones that exploit the poor for the benefit of the rich and powerful, are government-backed.

They exist thanks to the New Deal-era Supreme Court decision in the Parker case, that created an unwritten exception to the antitrust laws for government-backed cartels (the exception is called state-action immunity, or Parker immunity).

In a truly free market, cartels rarely occur because of collective-action problems.

But thanks to Parker, cartels in America are common. And almost all of them are state-enforced or state-backed.

And Parker is anything but a libertarian decision. It occurred during the New Deal constitutional revolution, when the Supreme Court gutted the limitations on federal power reflected in the Contracts and Commerce Clauses, over howls of protests from conservative and libertarian-leaning constitutional scholars.

The commenters above who complain about libertarians not opposing cartels fail to recognize that it is those commenters, not libertarians, whose political philosophy is to blame for kleptocratic cartels like the one that David Bernstein criticizes above.
12.13.2006 11:09am
Jay Myers:
J. F. Thomas:

That's the thing about you libertarians. You claim to be brilliant economists and believe in the free market. Yet to make your case, you expect everyone else (especially us ignnant guvmunt luvin' libluls) to be complete morons and not know the first thing about economics or the environment.

First of all, it doesn't matter if you are a huge mega-dairy or a family farmer an acre of farmland can support X number of cows depending on a number of factors (climate, geography, etc.), so to say a family farmer will pollute less than a corporate farmer is just ridiculous. It all depends on their farming practices, not who is running the farm.

Well you "ignnant guvmunt luvin' libluls" may know the first thing about economics or the environment but you sure seem to overlook the possiblity that large scale dairies might try to control their cost by buying inexpensive, energy intensive grain feed for their cows rather than buying a lot more land so that the cows could eat energy poor grass. Have you ever seen one of those industrial chicken farms where each chicken lives its entire life in a little pen so small that it can't even turn around? People find all sorts of ways to increase the number of animals that can be raised per acre.

Considering that smallholder stated that he has a dairy farm, questioning his statement of fact about herd size is tantamount to calling him a liar and not very wise unless you also have first hand experience of the subject. It doesn't take a lot of imagination to see that the statement is plausable. Certainly plausable enough that I wouldn't consider contradicting it without some sort of evidence.
12.13.2006 11:31am
J. F. Thomas (mail):
In a truly free market, cartels rarely occur because of collective-action problems.

Why on earth should this be the case? In a "truly free market", cartels will naturally arise in some services and commodities because of the cost of capital investment (electrical service, rail, water, sewer) make meaningful competition prohibitively expensive or, as is the case with the current example of milk, because of its perishable nature, makes it the perfect commodity for a dominant player to corner the market and once the market is captured, exclude competitors through the use of tactics like predatory pricing.

You just can't state "cartels wouldn't exist in a truly free market" as a truism like the "sun rises in the east" without some kind of support for this ridiculous assertion. How could you have a cometitive "free market" in sewer service or electrical service?
12.13.2006 11:37am
J. F. Thomas (mail):
Considering that smallholder stated that he has a dairy farm, questioning his statement of fact about herd size is tantamount to calling him a liar and not very wise unless you also have first hand experience of the subject. It doesn't take a lot of imagination to see that the statement is plausable. Certainly plausable enough that I wouldn't consider contradicting it without some sort of evidence.

Smallholder would have us believe that a corporate farmer would graze 3000 cows on 100 acres while a private farmer would only graze 50, he said nothing about a factory or feedlot situation. His statement was patently ridiculous.

There is nothing to prevent a family farmer (other than lack of financing) from converting his 100 acres to a feedlot and raising 3000 cattle anymore than a corporation. To say that a corporation is able to pollute more because it is more able to manipulate to legislative process (and therefore the corporation is able to get away with more pollution) is hardly an argument in your favor when you are advocating the elimination of the legislative process that regulates pollution rather than improving it.
12.13.2006 12:30pm
Clayton E. Cramer (mail) (www):
One of the great tragedies of liberalism is that it has effectively ruined the notion of governmental actions on behalf of the poor. Contrary to the liberal fantasy of a past where government allowed poor people to starve to death, and the libertarian fantasy where charity was private, the fact is that English law, and American law as a result, has recognized a governmental responsibility to provide a safety net for the poor since Elizabeth I's reign. See Blackstone's comments concerning the right to life, and how everyone in a community has a right to at least the essentials. This is no surprise; it's an outgrowth of the Christian assumptions upon which English society was based.

One of the reasons that liberalism went so far wrong was that several core concepts of the traditional welfare state were lost. One of those concepts was that because governmental resources were limited, the assistance that the government would provide to the poor would be an incentive to use that assistance only as long as necessary. This meant inside relief (poorhouses) that were not pleasant, to make sure that only those poor people who needed assistance would get it.

The other concept was that there were deserving poor, and undeserving poor. Some people just have bad things happen to them, and need some help. Other people go out of their way to screw up their lives (usually alcohol or drug abuse), and aren't really deserving of help.

The Great Society abandoned both of these concepts, and produces a mess that made a lot of people start to yearn for the good old days that never were of entirely private charity.
12.13.2006 12:38pm
Bill Harshaw (mail) (www):
A couple comments: there are two big shifts in dairy, a geographical shift from Wisconsin and New York to California and a size shift from 30 cow dairies using pasture to 3000 cow dairies using feed lots. The 2002 Ag Census showed these figures: dairies in 2002--91,989; dairies in 1997--125,041. Losing over a quarter of the dairies in 5 years resulted in dairy being a hot bipartisan issue in the 2002 Farm Bill and in new programs, as well as rejiggering the old milk pool system. No doubt a few family farmers expanded, but it may be more typical for outsiders/newcomers to the industry to run the big farms, like Mr. Hettinga, and create new processors. Do a Google search on "Dutch dairy farmers" if you're interested. Somehow the Dutch feel that the free market is alive and well in the U.S.

Finally, do a Google for Nixon dairy contributions--one of the elements in the articles of impeachment was dairy contributions as a quid pro quo for quotas.
12.13.2006 1:05pm
DavidBernstein (mail):
JF, the issue is not whether cartels could arise in a free market, but whether such cartels would be more or less damaging than the combination of the cartels that arise through government intervention, and the rent-seeking costs involved in both lobbying for and against such intervention.
12.13.2006 1:06pm
J. F. Thomas (mail):
Contrary to the liberal fantasy of a past where government allowed poor people to starve to death, and the libertarian fantasy where charity was private, the fact is that English law, and American law as a result, has recognized a governmental responsibility to provide a safety net for the poor since Elizabeth I's reign.

Oh really? Then please explain the Irish potato famine. The British government, by concious policy, allowed a sixth of the population to starve to death and another sixth was forced to emigrate because of the failure of one crop, potatoes. All the while, large landowners continued to export cash crops and have plenty of grain and meat for themselves and the middle classes. And there were no food shortages across the Irish Sea in England. It was an entirely preventable famine. It was the epitomy of lassaiz faire capitalism and the beginning of the end of it. When similar government policy was taken less than one hundred years later in Soviet Russia it would be rightfully condemned as one of the most heinous acts in the history of mankind.
12.13.2006 1:09pm
A.C.:
A lot of this debate seems to be government/anti-government, but how about a little discussion of different functions? Governments do a lot of different things. I happen to think they are good at using force and writing checks. Delivering discretionary benefits is a lot trickier, though. As soon as politicians start divvying up resources and favors in individual cases (rather than just setting up a program that applies to all), corruption enters the system. The more power to dispense resources and favors you collect in one place, the more corruption you get in that place. This is a good argument for limiting discretionary spending overall, but also for dispersing the spending that does take place so that it's harder to grab the whole pot at once.

But entitlements are in some ways the opposite of discretionary spending, not the same thing. If anybody can get a benefit by meeting certain criteria, and if nobody can get more by pestering a congressman, the corruption problem goes away. There's a different problem, namely that of a public that votes itself benefits the society cannot afford, but that's not the same as business trying to use government power to interfere with the free market.

Summary -- I think people should separate the discussion of entitlements (for individuals) from the discussion of corporate welfare/crony capitalism and corruption. It's possible to be in favor of one or the other without endorsing both. I happen to reserve the hottest place in hell for people who oppose payments to Grandma while endorsing corporate welfare, but that's just me.
12.13.2006 1:26pm
DavidBernstein (mail):
JF, boy is your version of history skewed. I'd suggest looking up the "anti corn law league."
12.13.2006 1:30pm
Elliot Reed:
Prof. Bernstein, it seems you only have half an argument here. What needs to be established is not only that government action is often bad, but that some proposed remedy would be superior. The regulatory/welfare state, while far from utopian, is vastly preferable to what we'd have in its absence.

On a similar note, I'm sure you'd have no trouble getting many liberals to agree that the so-called "defense" apparatus is often (usually, even) used to funnel money to favored interest groups. Similarly, many of us would argue that many of America's smaller-scale conflicts (interventions in Latin America, for example) have been fought to protect that interests of favored business interests at the expense of taxpayers, human rights or even American national security. I would personally argue that justifiable wars actually related to protecting the public interest in national security have been rare exceptions, not the norm. But I wouldn't conclude that the solution to this is to get the government out of the national defense business entirely.
12.13.2006 1:49pm
J. F. Thomas (mail):
JF, boy is your version of history skewed. I'd suggest looking up the "anti corn law league."

No, it isn't. Clayton's point was that British and American law does not allow the government to let people to starve to death. In the 1840's in England, at the zenith of its power, British government power did just that, near the very center of the most powerful empire the world had ever seen. And although a million people starving to death in Ireland may have been a harsh example of England's uncaring capitalism in action, smaller tragedies played out every day in its polluted and disease ridden cities. To pretend that private charity didn't fail utterly to address the concentrated poverty created by the industrial revolution is to deny reality.
12.13.2006 1:52pm
TJIT (mail):
This is a clear example of government power and government cartels being used to crush a smaller individual producer.

What we get in response from big government supporters is.

1. Disdain and utter lack of concern for the individual being squashed

2. Assertions without evidence that things would be worse if there was not a government milk cartel

3. Utter failure to even consider the possiblity that some other sytem would work better

4. Even when faced with a clear example of government action being used by large companies to squash smaller competitors
12.13.2006 2:03pm
Commentator:
J.F. Thomas is both ignorant and beyond education.

He suggests that the artificial Ukrainian famine through which the Soviet Communist dictator Stalin killed millions of Ukrainians was an example of "capitalism."

To the contrary, it was an egregious assault on property rights (the Soviet State seized farmers' crops during meager harvests, and tortured farmers to force them to turn over all their crops to the government, leaving them and their families to slowly starve and turn into human skeletons).

He writes that the Irish Potato Famine "was the epitomy of lassaiz faire capitalism [sic]," and that a "similar" famine occurred "less than one hundred years later in Soviet Russia."

Putting aside the fact that repressive, pervasively-discriminatory English-dominated colonial Ireland was far from a "laissez-faire" state (and featured many violations of private property rights), there is certainly nothing about Soviet Russia that can be blamed on "laissez-faire capitalism."

The Soviet-created Ukrainian famine that killed millions was, however, concealed by the liberal New York Times, which received a Pulitzer Prize for its deliberately mendacious Russian reporting, even as it deliberately concealed the millions of deaths occurring in the Ukraine, and the genocide occurring there and it other areas such as Kazakhstan.

The Times' Moscow head was receiving lucrative gifts from the Soviets in exchange for pro-Soviet coverage claiming record harvests even as people were starving to death.

The Times to this day refuses to give back the tainted Pulitzer which it received under false pretenses of accurate reporting.
12.13.2006 2:24pm
TJIT (mail):
J. F. Thomas, Elliot Reed

I've had years of experience on location watching the relatively small amount of money (compared to total federal spending) spent on farm programs create an absolute social, economic, and environmental disaster.

So i'm wondering if either of you have had any experience with (either observing, developing policy, or studying the results) the implementation of any government policy?

In my experience the people who are most cynical about "big government" are the ones who have seen it in action. Those who are most supportive of "big government" are the ones who have never seen what happens when the high minded ideals run into the reality on the ground and a battalion of rent seeking lobbyists.

I suspect we would be in pretty close agreement on what a society that functioned for everyone should look like. The disagreement between us is in how to develop and protect that kind of society.
12.13.2006 2:26pm
markm (mail):

I happen to reserve the hottest place in hell for people who oppose payments to Grandma while endorsing corporate welfare, but that's just me.

I agree with you - but I also see that any elected official who does that is just following the incentives that result from giving him the power to take other peoples' money for payments to Grandma. If he can do that, he can also take other peoples' money and give it to corporations, and the corporations pay better. All the Grandmas out there might have a lot of votes, but all that means is that the opportunistic politician looks for ways to camoflauge his actions.


Well, the fundamental question is whether you believe it's better to try and improve the functioning of government or to simply scrap the whole thing as a lost cause.

This is not an all or nothing question.


Personally, I'm pretty sure that in the absence of government a cabal of dairy producers would have a pretty easy time putting an entrepreneur out of business.

Libertarianism is not anarchism - it's trying to improve the functioning of government by limiting its power, especially to go beyond simply guarding the natural rights of individuals. Preventing one company from sending thugs to burn down competitors (for example) is simply guarding the rights of the competitors. Forming a government-sponsored cartel and imposing a special tax on competitors is quite something else.

A footnote: IMHO, true anarchism is a logical absurdity. If you eliminate one government, another one will arise within weeks. It might be rule by organized crime, but it's still government...


At least with government we have the hope of well-enforced antitrust laws, whereas otherwise we just have the law of the jungle.

It's downright odd making this argument in a case concerning a cartel that was created by the government, and had to go back for more legislation to restrict competitors. There are few, if any, real-world examples of monopolistic "trusts" that survived for long in the marketplace without being propped up by government action. The dairy cartel is certainly not one of them.
12.13.2006 2:37pm
DavidBernstein (mail):
But the starvation was caused by British tariffs on otherwise cheap food, not by "capitalism."
12.13.2006 2:38pm
TJIT (mail):
J. F. Thomas, et al.

The link below is to an interesting article by Joel Salatin a trendsetter in organic agriculture. The article provides examples of the litany of regulatory barriers faced in setting up a sytem to produce organic products. Generally, these regulatory barriers have substantial negative impact on the business efforts of small producers and minimal impact on large producers.

Everything I want to do is illegal
12.13.2006 2:40pm
Elliot Reed:
TJIT, Prof. Bernstein, etc.: I'm sure you'll have no trouble getting many liberals to agree that lots of government programs are counterproductive, malicious, unnecessary giveaways to special interests, or otherwise bad. Agricultural subsidies come to mind, as do aid to the contras in Nicaragua, "abstinence-based" sex education, torture in Gitmo, most of our weapons programs, the milk price cartel in question, and so forth.

But the fact that the war in Iraq is bad doesn't mean we'd be better off without a national defense force. The fact that health and safety regulations are sometimes used to squash competition doesn't of itself entail that we'd be better off under a regime of caveat emptor for all goods and services. The politics of public schools ensures that schools in wealthy areas are much, much better than schools in poor areas, but that doesn't mean the poor would be better off without public schools.
12.13.2006 2:56pm
Elliot Reed:
Another example: lots of liberals, like me, believe that the police often harass people of color, and that this is unjustifiably bad. We would never conclude from this that the solution is to not have police. Economic regulations and social welfare programs are exactly the same: they're often/sometimes bad, but that doesn't mean we'd be better off without them entirely.
12.13.2006 3:03pm
markm (mail):
To get back to David Bernstein's question about how one's family influences libertarianism vs. statism: I was raised by quite liberal parents who were also deeply involved in small town politics. They usually lost to the local establishment, which was dominated by small businessmen and Republican to the core (no Democrat won any local election between 1860 and 1982). I think that town's government was as clean as government ever gets - and in hindsight, I think that was because of the small business/Republican influence. (Republicans like the Bushes are a whole different matter...)

And yet, that squeaky clean and fairly conservative local government now and then would toss out a great example of statism run amok. I have no idea why, but the town owned the power company. They needed a new power plant. I don't know why the option of bringing in a commercial power company was rejected. (Service was better and usually less expensive from the commercial power company outside town limits, although that was a monopoly, too. It may have simply been a matter of economy of scale; a population of 20,000 is just too small for the most efficient plants.)

This town lived on the tourist trade. You'd think the worst possible place to put a new power plant would be on the waterfront, downtown, next to the busiest beach, but that's where they built it. Furthermore, the town had an ordinance limiting the height of buildings to 2 or 3 stories. There was one exception grandfathered in, a 10 story tower on the grandest hotel in town. The power plant had to be just about as tall, so after considerable argument another exception was carved out of the height ordinance. And so, right down on the beach, we've got something that looks like a hundred foot tall steel outhouse, with a heap of coal stored in the yard.

But that isn't what turned me small-l libertarian. It was seeing how much worse nearly every other governmental unit I've ever deal with or followed in the news was, as compared to that small town.
12.13.2006 3:07pm
TJIT (mail):
Elliot Reed,

This was a post on how government policy was used by large business interests to squash a smaller competitor. It was combined with a suggestion that maybe government does not always function like big government supporters think it does and government policies are not always a force for good.

It is bemusing to watch you and J.F. Thomas look at this post and the comments and argue that fiscal conservatives and libertarians are supporting absolute anarchy with no rule of law.
12.13.2006 3:19pm
Elliot Reed:
Prof. Bernstein does not appear to be arguing for anarchy or anything like it. My point is that his argument is invalid. The argument:

Economic regulations and social welfare programs are often used by special interests to do bad stuff.
Therefore, we should not have economic regulations or social welfare programs.


has exactly the same form as the following argument:

National defense forces and the police are often used by special interests to do bad stuff.
Therefore, we should have no national defense or police forces.


I don't think Bernstein endorses argument #2. My point is that the two arguments suffer from the same logical flaw: the fact that a certain class of government programs are sometimes (or even often) used to do bad stuff doesn't mean we'd be better off without any such programs. To show that we'd be better off without them you have to make a showing about what would happen in their absence.
12.13.2006 3:29pm
Clayton E. Cramer (mail) (www):
J.F. Thomas writes:


Oh really? Then please explain the Irish potato famine. The British government, by concious policy, allowed a sixth of the population to starve to death and another sixth was forced to emigrate because of the failure of one crop, potatoes. All the while, large landowners continued to export cash crops and have plenty of grain and meat for themselves and the middle classes. And there were no food shortages across the Irish Sea in England. It was an entirely preventable famine. It was the epitomy of lassaiz faire capitalism and the beginning of the end of it.
Suggestion: go read some books about the famine. (You might also learn how to spell while you are at it.)

1. The English Poor Law system wasn't operational in Ireland. They had something similar, but even it broke down under the scale of the failure of the potato crop.

2. While many people did starve to death in Ireland, far more common was death from malnutrition induced diseases.

3. While it is very fashionable to see the failure of the British government as a conscious decision, it is actually a bit more of clumsiness and slowness in responding to the crisis. There had been potato crop failures in Ireland before, although not anywhere near as severe. There had not been a crisis of this scale in Europe in a century, and not surprisingly, the mechanisms to deal with the problem were indequate.

4. Very large quantities of American dried corn were actually imported into Ireland for relief of the poor. Do to either lack of knowledge, lack of energy, or lack of fuel, quite a few starving Irish ended up eating it, or trying to eat it, uncooked. The results were catastrophic.
12.13.2006 3:36pm
Clayton E. Cramer (mail) (www):
J.F. Thomas writes:

To pretend that private charity didn't fail utterly to address the concentrated poverty created by the industrial revolution is to deny reality.
Wrong again. Was it adequate? No. But the fact is that along with governmental efforts to alleviate suffering (not completely successful) there were a number of charitable organizations involved in trying to assist the urban poor during the Industrial Revolution. The Salvation Army, for example. The Charitable Assistance Organization for another.

You really need to go to college, and get an education.
12.13.2006 3:40pm
TJIT (mail):
Elliot Reed,

The problem is, that as far as I can see, David Bernstein never made the argument you used in your comment
Economic regulations and social welfare programs are often used by special interests to do bad stuff.
Therefore, we should not have economic regulations or social welfare programs.
It is difficult to have a rational discussion when some of the participants are attributing arguments to their opponents that their opponents never made.
12.13.2006 3:44pm
J. F. Thomas (mail):
It is bemusing to watch you and J.F. Thomas look at this post and the comments and argue that fiscal conservatives and libertarians are supporting absolute anarchy with no rule of law.

Where did I say that? I merely argued that without government controls well-known and typical distortions of the market system would be utilized to achieve the exact same bad ends. In a libertarian and completely free market system I assume there would be no problem with monopolies or the use of predatory pricing to drive competitors out of business. What possible cause of action could there be if the market is to decide everything?
12.13.2006 4:04pm
Ragerz (mail):
I think that libertarians, like members of any ideology, have diverse motives.

Surely, a disproportionate number of libertarians are motivated by selfishness. I would not apply this to all libertarians, and certainly not Berstein himself based on his explanation for the reasons behind his libertarianism. But quite a few libertarians I have met personally are extremely nerdy, anti-social, resentful of others, excessively self-absorbed, and elitist.

But of course, there are other libertarians. People who have a near religious belief that government can do no good (except for enforcing contracts and protecting private property). They are not motivated by selfishness. Rather, they are motivated by irrationality.

When it comes to analyzing problems where government solutions, free market solutions, or a hybrid approaches should all be analyzed individually and on their merits, I think libertarians are simple-minded. Even if they are not in other contexts. For example, I don't doubt Bernstein's overall intelligence. I do doubt his ability to reason rationally when it comes to government. He has an emotional perspective and very strong anti-government bias that kicks in before examining the particular and individual facts surrounding a particular problem, along with the particular and heterogeneous ways to incorporate government into different possible solutions. This is illustrated by his own admission that his perspective on government comes largely from his negative childhood experiences.

This is the mirror image of certain liberals who are instinctively anti-business. Having seen private businesses do some really bad things, one might generalize that business and business men (and women) are bad in general. In the same way that libertarians are prejudiced against government, some liberals are prejudiced against business. As a pragmatist, I think that both prejudices are simple-minded and not helpful when it comes to formulating solutions to problems. Suprisingly, both types of irrational prejudice are held by otherwise intelligent people.

The better point of view is that held by pragmatists, who, if they are truly pragmatists, do not bring irrational prejudices either for or against government or for or against business into play when analyzing a particular problem. While the subset of libertarians and the subset of anti-business liberals who hold the irrational prejudices described above may be intelligent in other areas and intelligent overall, they are completely unintelligent when it comes to their ability to analyze certain problems.
12.13.2006 4:06pm
lisamarie (mail):
I am neither simple minded nor stupid. And I certainly shouldn't have to put up with government waste, corruption and abuse, because other people are too damn lazy to keep their own grandmas from starving to death, and think sniveling about how government programs should do it is moral and altruistic and everyone else is "selfish."
12.13.2006 4:14pm
Clayton E. Cramer (mail) (www):
The real problem here is that while government is certainly capable of taking actions to help the poor, it is more likely to take actions to help the rich, who are in a position to contribute to political campaigns. In practice, if you talk about helping the poor, quite a number of people who are not too clever miss that the government is redistributing twenty dollars upward for every dollar it redistributes downward.

Hence, the Democratic Party, in which people who are rich beyond my wildest dreams (George Soros, John Kerry, Peter Lewis, Arianna Huffington, John Edwards, Al Gore) screech about class warfare and "Two Americas" to distract people like J.F. Thomas from the manner in which wealthy people like themselves benefit from government largesse.

Now, it is an interesting question what would happen if we could elect a government that genuinely wanted to care for the poor, and stopped redistributing wealth upward to its fat cat buddies. It would also be entertaining to have a government stop actively doing things to injure poor people (the regressive Social Security tax; food price supports; occupational licensing for such essential public safety jobs as hairdresser). But I think this is fantasy. If you take away the government's power to redistribute wealth, yes, poor people would receive less assistance--but they might also have a chance of moving up, without the government aggressively looting their paychecks.

It is useful to remember what self-proclaimed socialist political party managed to sway not only large numbers of college professors, teachers, and newly enfranchised 18 year olds to vote for it in 1932 with the slogan, "Common needs before individual needs" while taking money from industrialists. Idealistic, but not too clever sorts voted for that slogan. If you don't recognize the slogan, I'll give it to you in the original language. You might be able to figure it out: Gemeinnuetz vor Einnuetz.
12.13.2006 4:15pm
Fare (mail):
The problem I have with libertarianism is that it purports to reject coercion yet it supports capitalism. Capitalism is based on property rights. Property rights entail the power to exclude. This exclusion is effected by coercion. In the last analysis, capitalism, like socialism, is predicated on coercion.

Pleae explain to me why this isn't so.
12.13.2006 4:24pm
David M. Nieporent (www):
To pretend that private charity didn't fail utterly to address the concentrated poverty created by the industrial revolution is to deny reality.
Incidentally, the industrial revolution didn't "create" poverty. It's not as if subsistance farmers were wealthy. The industrial revolution may have created relative poverty, by creating wealth, but that's a different story entirely.
12.13.2006 4:44pm
Toby:
I think PJ O'Rourke said it best:

Giving Money and Power to Politicians is like giving Whiskey and Car Keys to teenage boys...

And how quaint that Fare has re-created the Property is Theft line of argument. Perhaps he can consider another quote "By their fruits shall ye know them" and consider what the fruits of *that* argument have been.
12.13.2006 5:29pm
Ragerz (mail):
liberty writes:
"I am neither simple minded nor stupid."

Reasonable people can disagree.

"And I certainly shouldn't have to put up with government waste, corruption and abuse, because other people are too damn lazy to keep their own grandmas from starving to death."

See Professor Bernstein! This is exactly what I am talking about. You may not be greedy and selfish, but liberty (the poster, not the concept) definitely is. He is perfectly fine with letting some little old lady starve to death. He just doesn't want us to say what this implies: that he is selfish. (By the way, I am sure she will enjoy her "liberty" to starve to death.)

Unfortunately for the morally decent libertarians out there, there are a plethora of bad apples. Indeed, I suspect that the bad apples outnumber the good in the libertarian basket.

None of this is to say that insights about specific issues by people who consider themselves libertarians are never useful. Only that libertarians like the poster liberty discredit the ideas of libertarians in general, making it harder to find the occasional jewel in the rough. Don't condemn outsiders for merely being cognizant of reality -- that many libertarians are simply selfish -- blame and disassociate yourself from selfish individuals who have hijacked the libertarian label. If you ask me, libertarianism needs some serious housecleaning.
12.13.2006 5:29pm
Justin (mail):
I'm highly amused how conservatives on this thread just love to pretend that this is not an empirical question that has answers (and indeed, has been answered in the most powerful ways against thier hypothesis), but a theoretical one to which we can only look at Econ 101 principles.
12.13.2006 5:31pm
Justin (mail):
Please excuse the typos.
12.13.2006 5:32pm
Clayton E. Cramer (mail) (www):

The problem I have with libertarianism is that it purports to reject coercion yet it supports capitalism. Capitalism is based on property rights. Property rights entail the power to exclude. This exclusion is effected by coercion. In the last analysis, capitalism, like socialism, is predicated on coercion.

Pleae explain to me why this isn't so.
Do you have the right to exclude other people from the use of your orifices for sexual gratification? Why?
By the way, while I have some objections to libertarianism, it is incorrect to say that "it supports capitalism." It supports any non-coercive, non-fraudulent system that individuals want to get together and form. You want a people's voluntary collective? No problem. Libertarians won't object--they might even think it's kind of cool that you get to organize yourself that way. Socialists aren't prepared to be that tolerant, because socialism asserts that all property properly belongs to the government.

I'm highly amused how conservatives on this thread just love to pretend that this is not an empirical question that has answers (and indeed, has been answered in the most powerful ways against thier hypothesis), but a theoretical one to which we can only look at Econ 101 principles.
I don't see many conservatives on this thread except me, and I'm the arguing from empirical data--not abstract theories that sound good, work about 90% of the time--and fail the other 10%. (That's part of why I am a conservative.)
12.13.2006 5:47pm
Ragerz (mail):
I am apparently illiterate.

In my previous post, I referred to the poster liberty. I misread that. The poster is actually lisamarie. The points made, of course, hold.
12.13.2006 5:54pm
Clayton E. Cramer (mail) (www):

Incidentally, the industrial revolution didn't "create" poverty. It's not as if subsistance farmers were wealthy. The industrial revolution may have created relative poverty, by creating wealth, but that's a different story entirely.
The Romantic movement had this glorious fantasy of rural English life that compared favorably to conditions of urban industrial England. The reality was pretty bad.

What made the poverty of urban industrial England so horrible was that because it was concentrated, it was highly visible, and there was a loss of paternalistic beliefs and delusions. In a small village, the Romantics liked to imagine, everyone knew everyone else and there was a level of concern and caring that wasn't present in the dehumanized space of big factories.

I wouldn't be surprised if there was some truth to this; the face to face relationships are part of what kept American slavery on small farms in the border states relatively humane compared to the big plantations of the Cotton Belt, and the great sugar plantations of Jamaica, where everything that we think of slavery was present.

Still, the point is well-made; throughout human history, desperate poverty is the norm of human beings. Capitalism had provided the wealth that has lifted the vast majority of people in the industrialized world out of Third World conditions.
12.13.2006 5:56pm
SG:
"But quite a few libertarians I have met personally are extremely nerdy, anti-social, resentful of others, excessively self-absorbed, and elitist."

I could make the exact same statement, only substituting "liberal" for "libertarian".

Maybe there's something to this idea of a liberal/libertarian fusion after all.
12.13.2006 5:59pm
SG:
Ragerz:

Your willingness to take my money to help little old ladies does not serve as proof of your moral superiority.

Note that I have said nothing of my own willingness to give money to help little old ladies.
12.13.2006 6:05pm
Ragerz (mail):
Clayton E. Cramer writes:

"The real problem here is that while government is certainly capable of taking actions to help the poor, it is more likely to take actions to help the rich, who are in a position to contribute to political campaigns."

This is a good argument against Buckley v. Valeo. I don't think most libertarians would agree. Overall though, why corruption does exist and is a serious problem, I think it is over-hyped. Corruption exists in private business too. Remember Enron? That doesn't really establish that corruption is the only thing that exists.

Clayton writes:
"But I think this is fantasy. If you take away the government's power to redistribute wealth..."

Actually, it is a fantasy that you will ever take away the government's power to redistribute wealth. Last time I checked, we had a 16th Amendment that allows just that. Good luck on repealing it.

Since it is a fantasy to think that government will every not have the power to redistribute wealth, may I suggest a pragmatic alternative to fantasy? Apply your intellect to thinking about how government can be structured with appropriate internal checks and balances to minimize corruption and direct funds to appropriate purposes with maximal efficiency.

"Do you have the right to exclude other people from the use of your orifices for sexual gratification? Why?"

Can you see the difference between ownership of external things and ownership of oneself? Ownership of oneself is called personal autonomy. It should be noted that in practice, personal autonomy can be undermined by ownership of external things, as when women are abused by producers of pornography, pimps, who leverage their control of external things to humiliate, use, and abuse women. So, sometimes at least, personal ownership (i.e. autonomy) conflicts with the ownership of external things.

Cramer writes:
"I'm the arguing from empirical data."

Empirical data is our friend. As long as we understand what we are doing and realize that data is no substitute for normative judgment. Many people fail to appreciate the fact that empirical data is scarce with respect to many important areas of life, and that we still have to apply normative judgment to data. Empirical data has very definite limits and it is critical to understand those limits.
12.13.2006 6:11pm
Ragerz (mail):
SG writes:


Your willingness to take my money to help little old ladies does not serve as proof of your moral superiority.

Note that I have said nothing of my own willingness to give money to help little old ladies.


I agree. Obviously, you have to ask the question, moral superiority to whom. My willingness to re-redistribute money through taxes to prevent starvation does not prove my moral superiority to someone who would prevent that starvation with their own money. However, it does prove my moral superiority over someone who would allow that little old lady to starve to death.
12.13.2006 6:15pm
Parvenu:
One could make the same statement but substitute "law-and-order conservatives," "apolitical starving artists," and many other groups.

(I'll decline to reach the issue of whether "lawyers" is one such.)

Elliot: You say:
The argument:

Economic regulations and social welfare programs are often used by special interests to do bad stuff.
Therefore, we should not have economic regulations or social welfare programs.

has exactly the same form as the following argument:

National defense forces and the police are often used by special interests to do bad stuff.
Therefore, we should have no national defense or police forces.

There may be something to that, but the inquiry doesn't end there. The link you miss, and why those two arguments can take the same form and yet be logically different, is that you make no real analysis of the costs of repealing or abolishing the program in question. Perhaps a better way of putting it is that you need to take into account how necessary the evil is. Just be practical. Some programs are inefficient but necessary anyway (Army); some programs are inefficient and have fewer redeeming virtues.
12.13.2006 6:28pm
SG:
"However, it does prove my moral superiority over someone who would allow that little old lady to starve to death."

No, it doesn't prove that either. At most it proves that you assign moral weight differently (and I'd guess the original poster was hyperbolizing). It's not the case that everyone believes preservation of life has the highest moral weight. Didn't somebody famous once say "Give me liberty or give me death"?

And I'll hazard a guess that you support abortion and embryonic stem cell research, so (if true) you may want to reconsider the claim that a willingness to restrict the liberty of others in the name of preserving life is an unadulterated proof of moral superiority.
12.13.2006 6:31pm
David M. Nieporent (www):
Where did I say that? I merely argued that without government controls well-known and typical distortions of the market system would be utilized to achieve the exact same bad ends. In a libertarian and completely free market system I assume there would be no problem with monopolies or the use of predatory pricing to drive competitors out of business. What possible cause of action could there be if the market is to decide everything?
That's correct, except that predatory pricing is like unicorns. It doesn't exist, except in works of fiction.
12.13.2006 6:38pm
Ragerz (mail):
SG:

The person who said "give me liberty or give me death" was Patrick Henry. Someone who owned slaves. Someone who argued against ratification of the Constitution on the ground that it would give the Federal government power to abolish slavery.

You sure you want to take that guy as a role model? He is not exactly a "great American." More like a morally depraved one.

"And I'll hazard a guess that you support abortion and embryonic stem cell research, so (if true) you may want to reconsider the claim that a willingness to restrict the liberty of others in the name of preserving life is an unadulterated proof of moral superiority."

First of all, you should not make assumptions about the positions of others. Second, even the most pro-life individual distinguishes between embryos, fetuses and full fledged human beings in practice, even if not in rhetoric.

If abortion was really murder, surely the passivity of those who oppose it would not be justified. But while they sometimes use rhetoric that equates born humans with unborn human potential, they don't really believe it to the extent of taking action.

Overall, this is a pathetic argument. So, if I support abortion, then this proves that I think a dollar value can be attached to human life? Not really.

By the way, taking 5 dollars from Bill Gates via legitimate taxation is not exactly a major restriction on his liberty. It is very minor, all things considered. But if your an ideologue rather than a pragmatist, I wouldn't expect you to be able to understand.

I would save the little old lady. Therefore I am morally superior. You apparently would let her starve. Therefore you are morally inferior and selfish. And you give libertarians a bad name. Enough said.

I think I will stick to the libertarians I can at least take seriously. Like Eugene Volokh or even David Bernstein.
12.13.2006 6:43pm
Ragerz (mail):
David M. Nieporent writes:

"That's correct, except that predatory pricing is like unicorns. It doesn't exist, except in works of fiction."

You obviously know very little about antitrust. Obviously, predatory pricing does exist and it is perfectly rational to engage in. The argument is not whether below-cost predatory pricing exists, the argument is whether above-cost predatory pricing does.
12.13.2006 6:46pm
TJIT (mail):
Ragerz, J.F. Thomas, Elliot Reed,

I'm curious have any of you have had any experience with (either observing, developing policy, or studying the results) the implementation of any government policy?

It is my experience that those with the most enthusiasm for "big government" are folks that have

1. Never seen the policies implemented
2. Receiving government money / benefits (e.g. dairy farmers)

I'm starting to think that this is all conceptual for you folks, and you have absolutely zero real world experience of how government policy actually works on the ground.
12.13.2006 7:12pm
SG:
Ragerz:

You said, "First of all, you should not make assumptions about the positions of others."

That's good advice. You might want to consider it yourself.

You know nothing about what I believe. I've only played devil's advocate and yet somehow you've concluded that I'm "morally inferior and selfish". Of course, that's after drawing an equivalence between regressive FICA taxation and getting $5 from Bill Gates.

Of course you also said "libertarians I have met personally are [...] resentful of others, excessively self-absorbed, and elitist."

Well, I guess you'd recognize someone who meets that description. Sounds like a kindred spirit...
12.13.2006 7:21pm
TJIT (mail):
Anybody else notice that that the most of the points the big government supporters are using are either hypothetical (starving grandma) or so far in the past that they have little if any relevance to the current situation (Irish potato famine, industrial revolution.)
12.13.2006 7:26pm
Justin (mail):
Clayton,

You aren't arguing from the data at all. All I see is you providing possible arguments as to why we shouldn't consider certain data, often asserting a "reason" as if it was widely held when it is often a minority opinion.

This would be an empirical study

As would this

I'd post more but I am late for a concert.
12.13.2006 7:37pm
SG:
TJIT:

I have grown to think that government has replaced religion as the moral force in some people's lives. Look how vigorously Ragerz defends redistribution as a moral imperative. He explicitly argues that his support for redistributive programs is proof that he is a better person than those who oppose them. It's not beholden to reason, it's an article of faith.

The actual outcome seems secondary (if not completely forgotten); it's the means he's arguing for, not the ends. It's a modern form of tithing, a scarifice given to the great secular god of government.

I think that on some fundamental (biological) level people are hardwired to need a power greater than themselves. Something to give their lives meaning, provide guidance and absolve them of guilt. If not god, then (for most people) something must take its place.

And in complete fairness, while I'm agnostic about the existence of god, I definitely believe the government exists.
12.13.2006 7:38pm
Mark Field (mail):

Anybody else notice that that the most of the points the big government supporters are using are either hypothetical (starving grandma) or so far in the past that they have little if any relevance to the current situation (Irish potato famine, industrial revolution.)


So, your argument is that we should NOT learn from our experience?
12.13.2006 9:51pm
Clayton E. Cramer (mail) (www):
J.F. Thomas writes:


This is a good argument against Buckley v. Valeo. I don't think most libertarians would agree. Overall though, why corruption does exist and is a serious problem, I think it is over-hyped. Corruption exists in private business too. Remember Enron? That doesn't really establish that corruption is the only thing that exists.
The solution to corruption in government is to limit free speech? Wouldn't it make more sense to limit the government's power to do things that encourage corruption?

Anyone that thinks corruption in government is overhyped is obviously too young to remember the Keating 6. One of the more powerful critiques of what is wrong with politics was written by former California state senator Alan Robbins, from his federal prison cell, after he and a number of other California legislators were convicted of taking bribes to pass bills. He explained that no member of the California was likely to survive his first re-election campaign without being corrupted by the need for money--and their willingness to do whatever it took.

Now, not every legislator is corrupted. About the same time, another member of the legislature was being tried on the same charges. Among the shocking revelations that came out from the undercover FBI tapes was this legislator (name escapes me at the moment) telling them that they would have to get the bill passed when State Senator Rose Vuich was out of Sacramento. "She actually reads the bills!" and "She's not for sale." Within a month of Vuich being outed as unbribeable, she announced that she wasn't running for re-election--I guess the disgrace was too much for her.

Oh yeah, that crook was convicted--and promptly won re-election to his new office, with the State Board of Equalization. Think what his opponent thought--he couldn't even beat a guy just convicted of taking bribes in office.


Since it is a fantasy to think that government will every not have the power to redistribute wealth, may I suggest a pragmatic alternative to fantasy? Apply your intellect to thinking about how government can be structured with appropriate internal checks and balances to minimize corruption and direct funds to appropriate purposes with maximal efficiency.
I've suggested one. Limit the government's authority to regulate prices, wages, or entry into a marketplace. Milton &Rose Friedman's Free to Choose suggested a Constitutional amendment along those lines. It might be too far, but it is a good place to start talking.

Mike Royko's political biography of Mayor Richard Daley, Boss mentions that Daley, like many members of the Illinois legislature in the late 1940s, introduced what were known as "getter" bills. These were regulatory measures aimed at particular industries. The only reason for their introduction (since they seldom passed), was to get members of that industry to pony up money--and then legislators would quietly arrange for the bills to die in committee. Robert Sherill's The Saturday Night Special indicates that U.S. Senator Dodd's frequently introduced gun control measures in the early 1960s had, according to his staffers, a similar motivation--to get the gun manufacturers that were heavily concentrated in New England to come up with campaign funds--and why most of these bills went nowhere. Dodd arranged to kill his own bills.

Maybe its time to ask why this much power is in the hands of corruptible politicians?


Can you see the difference between ownership of external things and ownership of oneself? Ownership of oneself is called personal autonomy.
Why? What makes one self-evident and the other not? Your ideological soulmates have never believed in the right of personal autonomy.
12.13.2006 10:25pm
J. F. Thomas (mail):
Anybody else notice that that the most of the points the big government supporters are using are either hypothetical (starving grandma) or so far in the past that they have little if any relevance to the current situation (Irish potato famine, industrial revolution.)

Anybody else notice that all the arguments the Libertarians use are completely hypothetical and assume a perfect market with completely rational actors and any counter examples are written off as the result of an "imperfect market"

That's correct, except that predatory pricing is like unicorns. It doesn't exist, except in works of fiction.

Say what? Well financed entities never temporarily sell products at below cost to drive competitors out of business or out of a market?

The Romantic movement had this glorious fantasy of rural English life that compared favorably to conditions of urban industrial England. The reality was pretty bad.

How wrong you are. The first hundred fifty years or so of the industrial revolution did a lousy job of lifting the people out of poverty. And conditions in 19th century cities were undoubtedly worse than in the country, particularly in Europe. None of the cities in Europe were able to maintain a positive birthrate until the early twentieth century. They relied entirely on emigration from the countryside to grow and feed the demands of the factories.

It wasn't until the political and social disaster of World War I that threatened socialist revolution throughout the world and the great evil of social democracy raised its ugly head and governments finally began to protect workers' rights and not block unionization that capitalism began to bring vast numbers of the poor out of poverty.
12.13.2006 10:54pm
J. F. Thomas (mail):
Maybe its time to ask why this much power is in the hands of corruptible politicians?

It's amazing that you have so little faith in people yet so much faith in the market. No matter how corruptable and imperfect the government is, at least it is subject to public scrutiny. In your world, the people running the show would be completely hidden from any public scrutiny or accountability as the government would be a mere shell.

Even with a supposedly rigorous SEC regulation scheme we had in place, WorldCom was able to engineer the greatest pyramid scheme the world has ever seen. Just think how much longer Bernie Ebbers could have kept going and how much bigger the ultimate fall would have been had the DOJ not blocked the Sprint and (presumably) subsequent mergers.
12.13.2006 11:05pm
J. F. Thomas (mail):
I'm curious have any of you have had any experience with (either observing, developing policy, or studying the results) the implementation of any government policy?

I have written government policy in Washington, worked in highly regulated industries and had to implement policy. I have seen waste, fraud and abuse in government, but also seen government policy (I worked on environmental policy) do a lot of good and positive and efficient results.

In private industry I have seen lots of competence and efficiency alongside lots of waste and incompetence. From my observations, for every lazy no account government worker who can't be fired there is a lazy, no-account private worker who can't be fired because they are a relative or sleeping with the boss.

Government is no more or less inherently evil or inefficient than the market.
12.13.2006 11:33pm
Ragerz (mail):
SG writes:


You know nothing about what I believe. I've only played devil's advocate and yet somehow you've concluded that I'm "morally inferior and selfish".


Here is what I said:

"You apparently would let her starve." (bold added).

What I was doing here was making a probabilistic inference about what you would do, based on what you had said. The probabilistic nature of this inference should be clear by the use of the word "apparently." Now, it turns out, it is only the devil that you are advocating that would do this. So what? I am not really interested in you, I am interested in the idea of what the right thing is to do. So, your devil, lets call him X, is morally inferior and selfish. That you are not X does not change the basic conceptual point.

By the way, just as a conceptual matter, you should distinguish between an assumption and a probabilistic inference. They are not the same. My inference was based on evidence; namely, what you had said. When the evidence changes, so does the inference. This is not the same as an assumption which is just taken as a given.

"Of course, that's after drawing an equivalence between regressive FICA taxation and getting $5 from Bill Gates."

Did I ever mention FICA taxation? No. Therefore, it is absurd for you to say that I am drawing an equivalence. If I were to mention it, I would advocate for progressivity, rather than the status quo.

The point about $5 is to mention that taxation is not always exactly equivalent to a major deprivation of liberty.

"Look how vigorously Ragerz defends redistribution as a moral imperative. He explicitly argues that his support for redistributive programs is proof that he is a better person than those who oppose them. It's not beholden to reason, it's an article of faith."

Do you disagree that is morally wrong to allow little old ladies to starve to death?

Obviously, morals are not simply a matter of physics. From the perspective of physics, murder is nothing more than a rearrangement of atoms in the universe. But we attach a different meaning to it, based on morals rather than reason.

Of course, if you like, you can adopt nihilism. That would only make you even more marginalized than you already are as a libertarian. I must say, I would be quite happy with that result.

If you want to disagree with me, here is the argument you must defend: "It is not morally superior to prevent little old ladies from starving to death." Good luck with that. But were you playing devil's advocate earlier or weren't you? If you really were playing devil's advocate, then you must concede that those who would prevent little old ladies from starving to death are morally superior.
12.13.2006 11:56pm
Ragerz (mail):
Cramer writes:

"I've suggested one. Limit the government's authority to regulate prices, wages, or entry into a marketplace. Milton &Rose Friedman's Free to Choose suggested a Constitutional amendment along those lines. It might be too far, but it is a good place to start talking.."

First of all, even if I thought this was desirable, it is fantasy from a political perspective. You think you will never have the power to pass this sort of Constitutional amendment. Given that, I don't really see this as a good place to start talking. At least to the extent that one prefers non-fiction to fiction.

Second, as much as I respect Mr. Friedman, I do think he was excessively a top-down thinker, rather than a bottom-up thinker. This is typical of economists. Unfortunately, there are severe limits to our ability to generalize. I do not disagree with libertarians because I think their concerns about government abuse are complete fantasy. I disagree with them because they tend to transform specific instances of abuse into a generalized critique of government. Like you are implicitly doing now with your simplistic answer to every problem: limit government power.

I think the only intelligent way to attack problems is bottom-up. That is, you need to look at the specifics problem and the specifics of alternative solutions, even while keeping general top-down principles (i.e. rules of thumb) in mind. To the extent that you do use top-down rules, you need a very strong understanding of the assumptions behind them and their limits.

Overall, I am afraid that your suggestion is exactly the opposite of what I am asking for. First, it is politically impractical fantasy, even if I agreed with you. Second, it is based on a whole simplistic way of thinking.

By the way, for a good critique of Milton Friedman from Richard Posner, check out this link.

Cramer writes:
"Maybe its time to ask why this much power is in the hands of corruptible politicians?"

Think about Enron. Maybe its time to ask why this much power is in the hands of corruptible CEOs.

Obviously, there is no shortage of corrupt action by government officials. There is likewise no shortage of corrupt action by CEOs. Both government officials and CEOs have some amount of power of the lives of others. Indeed, many CEOs are more powerful than the vast majority of government officials, with respect to their ability to impact of the lives of others. Obviously, the level of power that each has varies in different contexts. For example, the power of a CEO over another individual is never as extreme as the power of a government prosecutor over someone accused of a serious crime. But the power of an annoying official at the DMV is quite limited. So, I prefer to look at these issues very specifically, without prejudice. Not in a top-down manner.

Your decision to generalize from government corruption, but not business corruption is entirely irrational.

Cramer writes:
"Why? What makes one self-evident and the other not? Your ideological soulmates have never believed in the right of personal autonomy."

First of all, I have no ideological soulmates. I am a non-ideological pragmatist. (Except if you think having basic morals or an aversion to letting little old ladies starve to death is ideological.) Second, you haven't answered the question. If you can't see any reason to distinguish between control of oneself and control of external things, that is your intellectual weakness. No one elses. It undermines your credibility, not mine. Finally, even if you were right about my "ideological soulmates" this is not a legitimate reason to dodge the substance of this issue, as you are doing. I wouldn't exactly call this an ad hominen attack, but its effects are similar as you are using it as an excuse to avoid engaging with substance.
12.14.2006 12:20am
Mark Field (mail):
Much of the argument in this thread seems to begin from the assumption that "government" is something alien which exists independently of the people of the United States. That ignores or disparages the very foundation of democracy, which is self-government by those people. If your position is that we should exalt the market above democracy, I can't see much of a political future for you.

I'm also surprised to find such purportedly strong individualists prepared to sacrifice their autonomy to corporations. Personally, I can't see that it makes much difference if my rights are restricted by the government or by some corporation; they're restricted either way. It makes more sense to me to balance the powers of each against the other in order to preserve my freedom of action.
12.14.2006 12:40am
Parvenu:
Could we perhaps call a time out? I don't think anyone in here really wants grandma to starve. The issue is whether government action, however well-intentioned, leads to a counterproductive result; I hope we are focused on results here, not mere good intentions.

During the New Deal, there was definitely a perspective that the private sector banking system had failed the people who had placed their trust in it. Since the financial sector is in some respects the foundation of all other sectors of the economy, this was a big deal. That there is some truth to the perception is undeniable; a tremendous number of the nation's banks closed their doors and the savings of many were wiped out. Against this backdrop, the general structure of Social Security (as well as the FDIC, on a related but separate note) were written. I seem to remember that even FDR was willing to contemplate at the time that there might be an element of private control over the assets to be held in the new national pension scheme, but this gained little traction because people didn't have much faith in the private financial sector; if it could be wiped out once, it could happen again. Therefore, the most risk-averse, low-risk/low-reward model imaginable was chosen, i.e., direct government transfer payments. I'm going off of memory here, from a lecture I attended regarding the prospect of personal accounts for Social Security today.

That was then. This, arguably, is now (well, that it is "now" is not arguable, but the implication that circumstances have changed ... aaah, you get the point). Our financial markets are immeasurably more sophisticated than they were in the 1920s; they are deeper, and many financial instruments that did not exist at the time (or existed only in rudimentary form by modern standards) are in widespread use today, including many creative ways of hedging against risk. Therefore, the practical libertarian claim asserts, it is extremely unlikely that grandma will starve due to a failure of the modern banking system, and the massive overhead costs, lack of any flexibility, and low effective rate of return (barely better than a savings accout) of Social Security in its current incarnation (where the "trust fund" is not proof against legislative raiding) is nearly certain to leave grandma worse off—not starving, but not eating cake, either—than she would have been had the income fed into the social security scheme been directed by her own choice to private investment. Grandma in this case is likely not only to be better off herself, but, along with millions of other grandmas and grandpas, is going to be making the financial sector even stronger because that capital will be put to far better use in New York than in D.C. One might object that grandma might not be a sophisticated investor, but that objection fails on two grounds: first, that even if all grandma did were buy T-bills and AAA corporate bonds from cradle to grave, she would do better than under the current Social Security system's effective rate of return; in addition, even if she were not a savvy investor herself, professional help is available (and in fact most people of means in this country do not manage their money completely alone). One might never become Warren Buffett, just as one might never become Gary Kasparov in the chess world, but the fundamentals of investing and money management and basic general financial literacy are not that difficult to acquire.

Things do get more complicated when we start talking about the prospect of having no intervention whatsoever (the libertarian absolutist position), i.e., where grandma is entirely on her own from cradle to grave. I do sympathize with the argument that it's unrealistic for today's generation to expect to move in with their children as they age. Whatever the case might have been in the 1920's and before—and I hesitate to look at any era so long ago through anything resembling rose-colored glasses, since I'd rather be alive today than at any point in the past and, sight unseen, I'd take living in 2020 over today—this generation is not that one. However, it's not an economically unsound argument that, if the Social Security system were disbanded today (or gradually "bought out" over the next decade or two) and seniors were confronting a world in which they were financially on their own, we would expect to see a case of Hayek's "spontaneous order" come to pass, and quickly. Banks, credit unions, investment firms, and other financial service firms would be rolling out products for both workers and retirees to meet the new demand before the ink dried on the repeal legislation (and it would likely be a gradual phase-out, not an instant abolition).

This does assume, as has been noted, competitive markets, many seller, many buyers, readily available information, low transaction costs, etc. However, in the financial sector, I think it's fair to say that we have that, or at least as close to it as we can get in this imperfect world.

I don't have any numbers on this (just reasoning from first principles), but I believe one of the reasons "the rich get richer" in our current system is that they can afford to put away their disposable income in far better investments than the "investment" that all American workers are compelled to make, i.e., their Social Security tax. That has an extremely low expected rate of return (under 2% by some estimates I've seen). By contrast, even a modest money market account today will give 5%, and, generally, more substantive equity investments even more over time. Someone with no disposable income for investment after paying their Social Security tax, however, will be stuck with the very-low-return federal check and little or nothing else. Grandma will still have that guaranteed check that will keep her from starving under this system—but she might not be able to afford that plane ticket to see her grandchildren at Christmas, either.
12.14.2006 1:23am
American Psikhushka (mail) (www):
Ragerz-

Quit the theatrics, no libertarian ever said they want to let grandmothers starve. We don't kick puppies and kittens or eat babies either.

And in what context are we talking about? Are we talking about a woman with a couple dozen children and grandchildren combined here?
12.14.2006 3:11am
American Psikhushka (mail) (www):
Fare-

The problem I have with libertarianism is that it purports to reject coercion yet it supports capitalism. Capitalism is based on property rights. Property rights entail the power to exclude. This exclusion is effected by coercion. In the last analysis, capitalism, like socialism, is predicated on coercion.

Pleae explain to me why this isn't so.


Capitalism is not coercion, it's the right to acquire the means to survive and pursue happiness through peaceful, voluntary market exchange.(what you exchange can be labor, property, intellectual property, etc.) But what you possess, including your body, you have a right to defend from others who are trying to take through something other than a peaceful, voluntary market exchange. So in capitalism the coercion only comes about when others are trying to employ a non-peaceful, non-voluntary, non-market exchange - the coercion only comes to answer the coercion of others.
12.14.2006 3:30am
American Psikhushka (mail) (www):
Ragerz-

Can you see the difference between ownership of external things and ownership of oneself? Ownership of oneself is called personal autonomy. It should be noted that in practice, personal autonomy can be undermined by ownership of external things, as when women are abused by producers of pornography, pimps, who leverage their control of external things to humiliate, use, and abuse women. So, sometimes at least, personal ownership (i.e. autonomy) conflicts with the ownership of external things.

If pornography uses force or fraud is isn't pornography, it's sexual assault. So if someone taped you without consent having sex it is sexual assault, not pornography. Ditto if they had a forged or sham contract. Ditto if someone was just going around drugging and raping people. If they made money from it then the victim would have a civil cause of action in addition to a criminal one.

But a normal commercial exchange is not force. Is a supermodel that makes millions of dollars a year posing nude being coerced? How about women who pose for Playboy, who often go on to significant acting/modeling careers? Granted this becomes debateable as you move into the porn industry are questionable due to the presence of possible substance abuse, possible psychological problems, possible coercion, etc.
12.14.2006 3:43am
American Psikhushka (mail) (www):
Correction: The victim mentioned above would have a civil cause of action regardless of whether criminally produced pornography made money. There's still personal assets like houses, cars, future earnings, etc.
12.14.2006 3:49am
fare (mail):
Capitalism is not coercion, it's the right to acquire the means to survive and pursue happiness through peaceful, voluntary market exchange.(what you exchange can be labor, property, intellectual property, etc.) But what you possess, including your body, you have a right to defend from others who are trying to take through something other than a peaceful, voluntary market exchange. So in capitalism the coercion only comes about when others are trying to employ a non-peaceful, non-voluntary, non-market exchange - the coercion only comes to answer the coercion of others.

Ahh, but isn't the unstated premise here that everyone agrees that private property's exclusion is justifiable. Otherwise, couldn't one argue that exchanges are not consensual. E.g. "The only reason I work seventy hours a week is because I am otherwise denied access to food." If we do not accept the initial exclusion of food as just, then how is this exchange just?
12.14.2006 8:09am
Smallholder (mail) (www):
I am a regular Volokh reader but have never kept track of who is who in the comment threads. Although J.F. Thomas has been labeled as uneducable, I will give him the benefit of the doubt and attempt to educate him about the realities of farming, if he will be patient enough to read a post from an inbred agrarian son of the soil.

"…to say a family farmer will pollute less than a corporate farmer is just ridiculous. It all depends on their farming practices, not who is running the farm."

"Smallholder would have us believe that a corporate farmer would graze 3000 cows on 100 acres while a private farmer would only graze 50, he said nothing about a factory or feedlot situation. His statement was patently ridiculous."

As a small-scale farmer I beg to disagree. Please note that I am not addressing Thomas' normative values about the nature of government -- I am simply providing additional information about how farming actually works. Perhaps if Mr. Thomas realizes that this humble farmer isn't patently ridiculous, his new knowledge of reality will lead him to reexamine his premises.

Without massive, pervasive and pernicious government interference in the agricultural sector, feedlots would not exist at all. The profit margins in confined feeding operations are very low -- a few dollars per animal. They can exist and earn a return on capital investment because of the volume of throughput. If the input costs were slightly rejiggered, the feedlots would quickly fall below the opportunity cost level in which investment is worthwhile.

The U.S. government keeps corn production artificially high. This is not to benefit the grain farmer (how's that workin' out?). This is to benefit Archer Daniels Midland and the big feedlot operators -- who have employ armies of lobbyists to make sure that the milk from the government teat keeps flowing. Understanding how the use of price floors work to skew the economic decision-making of farmers, I suggest Micheal Pollan's "The Omnivore's Dilemma." Remove the corn subsidies and fewer farmers will grow corn. The shift away from an erosive monoculture grain crop will benefit the environment and the price of corn will rise. If corn prices go up slightly, the profit level of each feedlot steer drops. There would probably be a small net per animal, but the net margin would not be a great enough return on investment to keep capital from fleeing to other enterprises. If the feedlot system breaks down, farmers who were free to respond to the marketplace would convert some of those former cornfields to polyculture pasture and raise beef on grass. Cutting out the middleman and reducing expenses means that small farms could make profits while ecologically managing their lands. Biodiversity would increase in the pasture. Run-off effluvients would decrease. Cattle would lead better lives (not an economic value, admittedly). More importantly, rural America would become economically viable again and American consumers would get healthier grass-fed beef. Some of us are already providing higher-quality beef to our direct-sale customers, but we do so operating under a great price disadvantage.

Corn is just one way in which government involvement favors large-scale environmentally catastrophic agriculture over sustainable production. There are several other examples including, but not limited to, diesel fuel, road improvements, environmental exemptions, and meat packing inspection protocol. I will highlight one further weird policy to refute Mr. Thomas' -- dare I say it? -- "patently ridiculous" assertion that:

"Smallholder would have us believe that a corporate farmer would graze 3000 cows on 100 acres while a private farmer would only graze 50, he said nothing about a factory or feedlot situation. His statement was patently ridiculous."

Last summer, on a trip sponsored by cooperative extension, I toured several dairy farms in Virginia and North Carolina with a group of about 100 other farmers. Time and again I heard farmers discuss how government subsidies had influenced their economic decisions to get larger. One fella actually moved from sustainable grazing to a confined feeding operation -- away from the one cow/two acres and toward five cows per acre model. He said it only made sense because the government's environmental "cost share" program paid to build a manure lagoon.

The manure management subsidies are a good example of how this works. We all would like to have a pristine environment. So well intentioned folks wanted regulations about run-off. Small-timers never really had a problem -- we small-timers have a massive economic incentive to avoid poisoning our land, let alone the fact that we actually live on that land with our kids. Big companies responded for lobbying for government subsidies that were cloaked in the fuzzy-sounding ideals of "saving the family farm." So the environmental restrictions were followed by government diversion of taxpayer funds to the large-scale environmentally suspect operations. With the taxpayer picking up the tab of correcting environmental problems, those larger operations' economies of scale allowed them to survive on smaller and smaller milk check margins (much like feedlot operators). They increased production. The milk cartel -- three big companies that control 90% of pasteurization -- can then pay less for the milk they process and make a larger profit. Small guys see their checks get smaller and go out of business. If liberals want to check the power of corporations in favor of the little guy, how's that workin' out? Government subsidies for big guys coupled with government barriers to entry for smaller-scale processing plants shifts all the economic power to the big guys. Great plan.

And it gets better!

The big guys, now flush, then start to meddle with the original environmental regulations. They carve out exemptions and report requirements. The regulatory regime becomes hideously complicated. Small farmers who (generally) aren't causing pollution problems now have to design elaborate waste-management plans and fill out mountains of paperwork. Time isn't free. The big guys can hire folks to take care of their share of the paperwork.

When the big guys push the envelope and pollute they are largely immunized by government action by hiring lawyers whose job it is to exploit the odd structure of the regulatory regime -- an odd structure created by legislators responding to lobbyists working for the big guys. The farmer who I talked to on the tour admitted that his manure lagoon had overflowed three times in one year -- dumping hundreds of tons of raw manure into the watershed. But he wasn't worried -- the regulatory regime did not penalize farmers for overflows caused by "unusual" rainfall.

This volume of manure wouldn't have existed at all except for the subsidy. No subsidy, no spill.

In short, Mr. Thomas, without your beloved government subsidies, no one would put 3000 cows on 100 acres -- because it isn't profitable.
12.14.2006 11:01am
Smallholder (mail) (www):
Bear with me -- I'm on a roll.

Another example of the perversity of government agriculture programs is the "drought emergency" aid. Four of the last five years local cattlemen have gotten federal assistance for drought emergencies. Aid is granted based on the number of cattle you own.

First of all, if it happens with that level of regularity, then it isn't an emergency. Why should farmers be immune from normal business risks? Should restaurant owners get checks from the government when an unseasonably rainy weekend depresses the number of people who dine out?

The drought assistance isn't just unfair. It produces results harmful to the environment.

Let's assume that a farmer has an eighty acre farm with soil that will support 40 cow/calf pairs in a good year, 30 cow/calf pairs in a normal year, and 20 cow/calf pairs in a drought year.

In a free market situation, most farmers would stock 30 cow/calf pairs. If the year is perfect, extra hay gets made and stored in the barn. Hay will last years. In a drought year, he'd pull the 30 cows off the land early and feed the good year hay to carry them through. They don't graze the ground too closely and cause erosion, so his farm is able to jump back when normal rainfall returns.

This is sustainable.

With drought emergency payments, every farmer stocks 50 cows. In a great year, he makes good money -- he has maximized his pounds of meat production. In a normal year, he grazes the soil a little too closely, causing some erosion and limiting the long term sustainability of his farm, but his losses aren't too great. In a drought year, he has skin and bones cattle, massive erosion from overgrazing -- and then makes a profit because he gets a drought emergency check based on the number of head he owns -- so the more damage he did to the soil by overstocking, the greater the check from the government.

And then we have farmers start agitating for drought checks in normal years.

How can anyone think this is a good system?

Liberals ought to be just as outraged as Libertarians.
12.14.2006 11:25am
TJIT (mail):
Mark Field:
Much of the argument in this thread seems to begin from the assumption that "government" is something alien which exists independently of the people of the United States. That ignores or disparages the very foundation of democracy, which is self-government by those people.
Lots of government programs exist essentially independently of the citizens of the United States. Most citizens have no idea how farm programs work and the damage they do. The citizens are busy, the media are busy and neither have the time or inclination to give farm programs the oversight they need. But ADM knows the farm programs very well and uses the legislative process to get things it wants. It is the danger of diffuse costs and concentrated benefits.

I'm also surprised to find such purportedly strong individualists prepared to sacrifice their autonomy to corporations. Personally, I can't see that it makes much difference if my rights are restricted by the government or by some corporation; they're restricted either way.
This shows your fundamental ignorance of law and how things actually work. Corporations can't restrict your rights by themselves. They require government action to restrict your rights. The case being discussed here provides a perfect example of this.

It makes more sense to me to balance the powers of each against the other in order to preserve my freedom of action.
Nice theory but unfortunately for you actual practice often results in the corporations using government power to do things they could not do otherwise. Examples include this case and the Kelo condemnations.
12.14.2006 12:06pm
TJIT (mail):
J.F. Thomas

Government is no more or less inherently evil or inefficient than the market.
That may be true but we don't give markets the power to arrest, jail, and involutarily take property from people. The government has a huge amount of power and because of this it is wise to make sure the application of government power is limited and used carefully
12.14.2006 12:16pm
Mark Field (mail):

This shows your fundamental ignorance of law and how things actually work.


Gee, consider me suitably chastened. Perhaps you could come over and tutor me when you have some free time.


Corporations can't restrict your rights by themselves.


Nonsense. They can, just for example, pollute the air I breathe or the water I drink. I can't prevent that except through self-help or .... wait for it ... government action.

Nice theory but unfortunately for you actual practice often results in the corporations using government power to do things they could not do otherwise.

So what? Any human activity involves less than perfect outcomes. Big deal. Even the sacred MARKET doesn't guarantee perfection, it only promises reasonable efficiency.

But this whole argument is inconsistent with your rejection above of historical experience such as the potato famine and the Depression. Surely we might consider those outcomes less than perfect, but we wouldn't reject markets altogether just on that basis.
12.14.2006 12:23pm
TJIT (mail):
SG
I have grown to think that government has replaced religion as the moral force in some people's lives.
I see your point. This thread started with a simple example of how established businesses used government power to squash a competitor.

This competitor had found a market, built a business to supply it, and was doing well. His competition did not like it and used government legislation to destroy his competitive advantage.

From this we went to the industrial revolution, the Irish potato famine, starving grandmothers, and all points in between. It appeared to be a complete freakout response to an example that showed the government does not always work the way people think it does and government actions often create unintended negative results.

I suspect one reason for the freakout was that the members of the first church of big government don't like heretics pointing out everything is not warm and fuzzy in the kingdom of big government.
12.14.2006 12:40pm
TJIT (mail):
Mark Field,

Regarding my comment that actual practice often results in corporations using government power to do produce bad results they could not do otherwise, you said.
So what? Any human activity involves less than perfect outcomes. Big deal. Even the sacred MARKET doesn't guarantee perfection, it only promises reasonable efficiency.
Regarding my my comment that corporations can't restrict your rights by themselves, you said
Nonsense. They can, just for example, pollute the air I breathe or the water I drink. I can't prevent that except through self-help or .... wait for it ... government action.
So it appears that the results don't really matter to you it is just who does it.

Government actions produces bad results you say So what? Any human activity involves less than perfect outcomes. Big deal.

Corporations produce bad results you say I can't prevent that except through self-help or .... wait for it ... government action.

So bad results from government action get a so what and bad results from companies get a call for more government action?

I think bad results are bad results whether or not they are produced by the market or the government action. And if government action is producing bad results we need to stop the government action that is causing the bad results.
12.14.2006 1:07pm
Mark Field (mail):

So bad results from government action get a so what and bad results from companies get a call for more government action?

I think bad results are bad results whether or not they are produced by the market or the government action. And if government action is producing bad results we need to stop the government action that is causing the bad results.


I agree that bad results should be avoided whenever possible. If the government is the guilty party, then we need freer markets (or maybe judicial review or some governmental reform). If markets are guilty, we may need governmental action.

It's all a balance. What I object to is the glorification of markets by some commentors here; they seem to be carrying things so far that NO action can ever be taken simply because "the market" came to a result. For them, theory is trumping both experience and autonomy.
12.14.2006 1:43pm
lisamarie (mail):
Ok, let's try this again. No one in my family, including my grandmother, is ever going to go hungry as long as I have a cent to my name. I mentor kids. I support a charity that helps bring safe drinking water to the third world. I do safe drinking water research for developing countries. But certainly I can't hope to match the moral superiority of people who want the government to prevent grandmas from starving because they can't be bothered to do it themselves. Thanks for clarifying for me how selfish I am.
12.14.2006 2:08pm
American Psikhushka (mail) (www):
Fare-

Ahh, but isn't the unstated premise here that everyone agrees that private property's exclusion is justifiable. Otherwise, couldn't one argue that exchanges are not consensual. E.g. "The only reason I work seventy hours a week is because I am otherwise denied access to food." If we do not accept the initial exclusion of food as just, then how is this exchange just?

I realize exclusion is an academic term used in property law. And your logic is sound - the right to exclude does seem to be an agreed upon assumption. But the way the usage is framed seems to be dramatically Marxist: When I breathe I am excluding the very stuff of life from all others, mercilessly straining the oxygen out of it, and rapaciously imposing my waste gases on all the creatures of the earth.

Whereas the conflict - the coercion or threat of coercion - only occurs when someone is trying to obtain something owned by someone else in a non-voluntary manner. Generally, there are no fights for air (excluding the modern problem of air pollution) because it is abundant. Ownership and peaceful market exchange seem to be the most efficient and peaceful means of allocating scarce resources.

And doesn't the problem of the "coercion of exclusion" still exist in communist, socialist, and collectivist systems? Since the state (or workers, people, collective, etc.) claims ownership of the means of production and the authority to set prices, quotas, rations, etc. for all goods aren't they claiming universal ownership and thus a universal right to exclude? Sure, they claim that everyone has a right to the essentials, but it is really subject to their authority - the terms "useless eaters" or "useless mouths" comes to mind. So while your logic is sound free market capitalism still seems to be the least coercive of the alternatives.
12.14.2006 2:14pm
American Psikhushka (mail) (www):
Mark Field-

It's all a balance. What I object to is the glorification of markets by some commentors here; they seem to be carrying things so far that NO action can ever be taken simply because "the market" came to a result. For them, theory is trumping both experience and autonomy.

Right. But I think a big part of the problem is that often "market failures" are due to government intervention and meddling rather than market problems, as smallholder's comments illustrate. So we have to be very careful when identifying the true cause of the problems. It's easy to get into the "gov't meddling - problem 1 - more gov't meddling - problems 1, 1a, 2, 3 - gov't meddling....." cycle, because that's what gives politicians and their patrons power, funding, influence, authority, and often allows them to keep being elected when they are contributing to many of the problems.
12.14.2006 2:49pm
Mark Field (mail):

But I think a big part of the problem is that often "market failures" are due to government intervention and meddling rather than market problems, as smallholder's comments illustrate. So we have to be very careful when identifying the true cause of the problems. It's easy to get into the "gov't meddling - problem 1 - more gov't meddling - problems 1, 1a, 2, 3 - gov't meddling....." cycle, because that's what gives politicians and their patrons power, funding, influence, authority, and often allows them to keep being elected when they are contributing to many of the problems.


I agree with this.
12.14.2006 3:48pm
markm (mail):

The argument:

Economic regulations and social welfare programs are often used by special interests to do bad stuff.
Therefore, we should not have economic regulations or social welfare programs.

has exactly the same form as the following argument:

National defense forces and the police are often used by special interests to do bad stuff.
Therefore, we should have no national defense or police forces.

The difference is that there are no workable alternatives to national defense and police forces. The consequence of a government failing to provide those functions isn't more freedom, not even the "freedom" to let grandma starve, but the forcible imposition of far worse rule, by foreign governments or by the local version of the Mafia.
12.15.2006 8:18am
markm (mail):

In private industry I have seen lots of competence and efficiency alongside lots of waste and incompetence. From my observations, for every lazy no account government worker who can't be fired there is a lazy, no-account private worker who can't be fired because they are a relative or sleeping with the boss.

You have a choice as a customer or an employee as to whether or not to deal with that company. If management allows internal corruption to get too bad, they'll be out of jobs when the company goes out of business. (Except for companies that live on government-granted monopolies, such as the ones that supply your local phone service.) You have no choice about whether to deal with a government agency, and the elected officials who are ultimately in charge are often keeping their jobs by means of corruption.

Or do you find dealing with the DMV as pleasant and easy as dealing with Walmart?
12.15.2006 8:28am
J. F. Thomas (mail):
You have a choice as a customer or an employee as to whether or not to deal with that company. If management allows internal corruption to get too bad, they'll be out of jobs when the company goes out of business. (Except for companies that live on government-granted monopolies, such as the ones that supply your local phone service.)

But you, and smallholder for that matter, are missing my point that I have been making throughout this thread. Libertarians believe that free of government restraint that the market will work perfectly and from your post I assume you think there will be several alternatives to the DMV and apparently multiple choices of roads to drive on, this simply won't happen.

Free of government restraint there still won't be one choice for certain commodities like milk (I explained above how the market would tend toward a monopoly, which smallholder mistakenly took as my approval of the current entire horrible government agricultural policy). You wouldn't have much choice, if any, in phone service (there are very good reasons why phone service was government-granted, such without the government-granted monopoly no private company would go to the expense and risk of providing service to rural areas). Same goes for electrical service. Maintaining the grid is a responsibility of the entire country, not individuals. Nobody is going to offer to run a second sewer line to your house and try and undercut the current provider. The investment in the infrastructure (not to mention the legal hurdles in getting all the necessary easements) is just too great. You can't run a transportation system of any type without massive government involvement and subsidies--this has been true since the Roman Empire and is not ever going to change.
12.15.2006 9:08am
Fare (mail):
American Psikhushka
I tend to agree with you that a market economy is least coercive. It is much less coercive than Communism. However, capitalism has its coercive aspect. There are people who through no fault of their own have very little. They are born and raised in poverty. They are unable to receive quality education. As a result, they must accept drudge work at low pay. Just to keep head above water, they must work long hours. They have neither the time or the energy to develop and advance themselves. They make mistakes, as do the rich, like unexpectedly getting pregnant. Unlike the rich, however, they pay for a much higher price. They are viewed as lazy, immoral and low-class.

Such people are more responsive to socialism, because they do not appreciate freedom like the wealthy do.
12.15.2006 10:11am
J. F. Thomas (mail):
In a free market situation, most farmers would stock 30 cow/calf pairs. If the year is perfect, extra hay gets made and stored in the barn. Hay will last years. In a drought year, he'd pull the 30 cows off the land early and feed the good year hay to carry them through.

So in your free market system what happens when the drought lasts several years or is particularly severe and you run out of hay, run out of credit, and are unable to obtain more? And this not only happens to you but the drought is widespread and happens to thousands of farmers throughout a huge swath of the country. Thousands of farmers are unable to feed their cattle because they are unable to buy feed for them because of a persistent, long-term, drought has dried out their land and there is no government safety net to provide emergency aid. Millions of cattle starve to death or are dumped on the market at once, causing a short term crash in beef prices. What happens next?

That's the unfettered free market.
12.15.2006 10:14am
J. F. Thomas (mail):
Such people are more responsive to socialism, because they do not appreciate freedom like the wealthy do.

Or maybe they ask themselves "what has the market ever done for me"? Why are you surprised when the conclusion they come to is "nothing".
12.15.2006 10:23am
Smallholder (mail) (www):
Ah, Mr. Thomas.

I apologize for missing your point. I assumed that when you said that my claim that a family farmer would appropriately stock his land was "patently ridiculous" that you meant it. My bad.

I am glad that you have confessed that the current government farm program is horrible. That said, given the way our republic works, the burden lies on you to show that any government program won't eventually drift into this (your word, remember?) horrible state given that big business has an inherent interest is squelching the little guy and has the pockets to hire lobbysists and make political contributions. We agree that the current system is horrible. How could it be better?

Your point about milk tending toward a natural monopoly is simply wrong. I'm not a libertarian. I'm well aware that public utilities would never reach me without some government support (I'm glad they do, but don't really think I have a moral right to ask city-dwellers to finance my decision to live in the country...) I will concede that there are some natural monopolies - but milk is not one of them. Milk survived as a commodity with many marketing avenues until very recently. Centralization began in earnest in the 1970s, coinciding (coincidentally?) with the erection of Nixonian statist farm policy. Interestingly, farmers are being paid the same price per pound of milk as they earned in the 1970s. Milk prices at the supermarket have gone up. Could it be that the increase in supermarket price is paying for the cost of centralization?

Also coincidentally, and I can't conceive how this could possibly be connected, small dairies began to decline precipitously in the late 1970s. Odd, ain't it?

Dairy farmers who have been able to market directly have been very successful at selling their milk. There is a big desire among consumers for milk free of antibiotics and BST hormones from humanely raised grass-fed cows. I sell to the milk monoply and get $.12 cents a pound for milk. If I could sell directly to the customer, even assuming a $50,000 loan for a plant and bottling costs, I could earn $.40- $.50 cents a pound. Since my net per cow would go up precipitiously, I could make a decentliving with a herd of 20 cows without a million dollars worth of tractors, combines, etc. And the environment would be better.

Would selling me own milk be riskier? Sure. Selling to the milk monopoly guarantees a (low) income. But if I'm willing to take a risk and deliver a better product for a lower price to the consumer, what possible justification can a statist have to prevent this positive market outcome?
12.15.2006 11:32am
Smallholder (mail) (www):
Mr. Thomas,

I am unclear if I was also missing the point when I took your statement that:

"to say a family farmer will pollute less than a corporate farmer is just ridiculous. It all depends on their farming practices, not who is running the farm." at face value?

You haven't addressed the additional information I gave you about how government programs are the only things that make unsustainable farming profitable. Have you ceded the point that a small farmer who doesn't count on government supports would take care of his own land and animals out of self interest?
12.15.2006 11:36am
Smallholder (mail) (www):
Mr. Thomas,

Once again I seem to be called on to offer a primer on how agriculture works. You write:

"So in your free market system what happens when the drought lasts several years or is particularly severe and you run out of hay, run out of credit, and are unable to obtain more? And this not only happens to you but the drought is widespread and happens to thousands of farmers throughout a huge swath of the country. Thousands of farmers are unable to feed their cattle because they are unable to buy feed for them because of a persistent, long-term, drought has dried out their land and there is no government safety net to provide emergency aid. Millions of cattle starve to death or are dumped on the market at once, causing a short term crash in beef prices. What happens next?

That's the unfettered free market."

First of all, droughts of Biblical proportion haven't happened in recent years. My portion of Virginia just had a four year "drought" that was the worst in recorded history. Grass never stopped growing. Those of us with appropriate stocking rates survived just fine, thanks.

Droughts also tend to be localized, so the widespread impact you describe is unlikely. Millions of cattle won't starve.

Folks who had refused to look out for their own economic self interest and had persisted in overstocking would go out of business. As they should. You don't have the right to run a business ineffeciently.

I assume from your comments that you are a city dweller. As a city dweller, you probably aren't aware of the moisture-holding properties of well-managed pasture. During the drought that drove welfare-queen farmers to cry for government "emergency aid" because they had no pasture left by June, my grass continued to grow through late October. Not overgrazing means my grass has the strength to send its roots further into ground in pursuit of moisture. The fact that I have a good sod has stopped erosion so the layer of soil capable of storing moisture is deeper. Making decisions based on what is best for the land rather than the best way to garner taxpayers' money meant that while the neighbor's cows were skin and bones eating crappy hay my animals were fat and happy grazing grass.

Good farmers can weather a patch of bad weather. We have for millenia.

Good farmers cannot weather bad government policy that allows bad farmers to flood the market and lower prices.

I make decisions based on the health of the soil because I find it philosophically gratifying. If we pulled government drought programs, all farmers would make decisions about the health of the soil - because the invisible hand of their own greed would push them in that direction.
12.15.2006 12:25pm
TJIT (mail):
J. F. Thomas, You said
So in your free market system what happens when the drought lasts several years or is particularly severe and you run out of hay, run out of credit, and are unable to obtain more?
That situation exists now and has existed for about five to six years in various parts of at least texas, colorado, oklahoma, new mexico, the dakotas, wyoming and probably other states. People have sold out their cattle or moved them to areas that have sufficient rain. The drought has been miserable but it has delayed the expansion of the cattle herd and provided high proices for the cattle the producers have had to sell.
Thousands of farmers are unable to feed their cattle because they are unable to buy feed for them because of a persistent, long-term, drought has dried out their land and there is no government safety net to provide emergency aid.
In this situation the only rational thing to do environmentally or economically is to sell the cattle or move them to another state that is not impacted by the drought. Trying to feed range cattle in a drought situation is a horrible business decision and exceedingly destructive to the environment.

Millions of cattle starve to death or are dumped on the market at once, causing a short term crash in beef prices. What happens next?
The government staying out of the beef cattle market kept this from happening.

You know one case where there were
Millions of cattle ... dumped on the market at once
The federal government whole herd dairy buyout in the 1970s. That was supposed to fix the surplus dairy problem (no surprise it did not). But all of the dairy cattle be sold for slaughter did manage to gut the non subsidized beef cattle market and caused a big chunk of economic damage to those producers, (more of those nasty unintended consequences).
12.15.2006 3:11pm
TJIT (mail):
J.F. Thomas, You said

But you, and smallholder for that matter, are missing my point that I have been making throughout this thread.

In case after case on this thread people have pointed out actual cases of bad results of government action and good results of market action. You have generally responded with patently ludicrous statements like

Free of government restraint there still won't be one choice for certain commodities like milk
It boggles the mind to watch you make a statement like that when this thread started with an example of someone providing additional choices for milk and having it crushed by government action.

I suspect both of us want everyone in society to have a chance to do well, corporations to have limited influence on the economy and protection for the environment. I can't understand your utter refusal to even consider modifiying, let alone scaling back, goverment programs in spite of the volumes of evidence of the damage they cause to the above goals.
12.15.2006 3:44pm
American Psikhushka (mail) (www):
Fare-

However, capitalism has its coercive aspect. There are people who through no fault of their own have very little. They are born and raised in poverty. They are unable to receive quality education. As a result, they must accept drudge work at low pay. Just to keep head above water, they must work long hours. They have neither the time or the energy to develop and advance themselves. They make mistakes, as do the rich, like unexpectedly getting pregnant. Unlike the rich, however, they pay for a much higher price.

I understand this. Unfortunately they don't realize that increasing the size, scope, and power of the state makes things worse for themselves and everyone else long term.

They are viewed as lazy, immoral and low-class.

I disagree here. Possibly some elitists and puritans feel this way. Of course we are talking about honest, law-abiding people here. I would agree with that view if someone was stealing from me.

Such people are more responsive to socialism, because they do not appreciate freedom like the wealthy do.

I believe that its a matter of education and awareness rather than appreciation. If they realized that socialism just created a new pompous, wealthy elite and made nearly everyone poor long-term hopefully socialism wouldn't be such an attraction.
12.16.2006 8:47am
American Psikhushka (mail) (www):
J.F. Thomas-

But you, and smallholder for that matter, are missing my point that I have been making throughout this thread. Libertarians believe that free of government restraint that the market will work perfectly and from your post I assume you think there will be several alternatives to the DMV and apparently multiple choices of roads to drive on, this simply won't happen.

You're creating libertarian strawmen here. Most libertarians believe in scaling back the state as much as possible but realize that some essential functions will probably by necessity be run by the state. Those that believe in absolutely no government controlled functions are called anarchists.
12.16.2006 9:04am
American Psikhushka (mail) (www):
J.F. Thomas-

Or maybe they ask themselves "what has the market ever done for me"? Why are you surprised when the conclusion they come to is "nothing".

No, I'm surprised when they turn to socialism, which does an even worse job of reducing the number of poor people. But then I realize that a lot of the people that run and are involved in the educational system are ideologically socialist.
12.16.2006 9:10am
J. F. Thomas (mail):
No, I'm surprised when they turn to socialism, which does an even worse job of reducing the number of poor people. But then I realize that a lot of the people that run and are involved in the educational system are ideologically socialist.

How are you defining socialism? European democratic socialism? If so, your statement is absolutely, demonstratively false. There is no doubt that the social welfare states of Scandinavia (and western European social democracy as a whole) have done a much better job of reducing the number of poor people than we have in this country. And no matter how much you may deny it, the war on poverty and the social, economic, and political programs (e.g., social security, rural electrification, protection of unions, the TVA, Medicare and Medicaide, price supports for agriculture) implemented in this country both during the great depression made great strides in reducing poverty in this country. The facts, figures and statistics are there to support that contention.

And I obviously mistook your argument smallholder. I thought you were arguing against all government intervention in the market on milk. You just want to go back to the "good ol' days" when the milk program preferentially helped the family farmer, not corporate agribusiness.
12.16.2006 9:38am
American Psikhushka (mail) (www):
J.F. Thomas-

The European "social democracies" are not considered socialist by a lot of the Austrian school. Ludwig von Mises referred to them as "hampered market economies". And those countries and economies are a lot different from ours. There are some economists and pundits that also predict those countries have a rocky road ahead as well.

As far as this country is concerned, I'm not so sure its as cut and dried as you portray. Several scholars suggest much of the government action taken exacerbated and extended the great depression. And the US economy is a powerhouse - it can withstand a lot of abuse. After all it took the Soviets decades to completely run their economy into the ground. But that doesn't mean a big bloated government like ours is a smart thing to do - it isn't.
12.16.2006 11:11pm
Fare (mail):
American Psikhushka
I mean that poor people do not appreciate freedom as much as rich people, in the sense that they do not enjoy its benefits as much as the wealthy do. On the other hand, freedom has a value in itself, no doubt, but at some point, its value is offset by need. Only a hungry person could truly understand the old socialist expression "you can't eat liberty".

You might argue that freedom and need is not in tension and never has been. I would tend to disagree. Some socialists argue that exploitation has merely been outsourced. I don't know.

I don't think the answer is socialism however. I think that some mixture of capitalism and socialism is probably best. This would be something along the lines of the Scandinavian countries. Capitalism to provide incentives to work; socialism to provide a safety net. This would entail redistribution but no so much as to seriously hinder incentive to work and save. I would agree that zero social spending would probably grow the economy faster than with it, but I don't think that that growth is worth a child's life.

Moreover, I feel that people are likely to rely on others to provide for the needy. As a result, the needy will not be provided for as well by private charity as the government.
12.17.2006 3:58pm